Correlation Between Reliance Global and Falcon Oil
Can any of the company-specific risk be diversified away by investing in both Reliance Global and Falcon Oil at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Reliance Global and Falcon Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reliance Global Group and Falcon Oil Gas, you can compare the effects of market volatilities on Reliance Global and Falcon Oil and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Reliance Global with a short position of Falcon Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reliance Global and Falcon Oil.
Diversification Opportunities for Reliance Global and Falcon Oil
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Reliance and Falcon is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Global Group and Falcon Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Oil Gas and Reliance Global is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Reliance Global Group are associated (or correlated) with Falcon Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Oil Gas has no effect on the direction of Reliance Global i.e., Reliance Global and Falcon Oil go up and down completely randomly.
Pair Corralation between Reliance Global and Falcon Oil
Assuming the 90 days horizon Reliance Global Group is expected to under-perform the Falcon Oil. In addition to that, Reliance Global is 2.44 times more volatile than Falcon Oil Gas. It trades about -0.54 of its total potential returns per unit of risk. Falcon Oil Gas is currently generating about -0.08 per unit of volatility. If you would invest 8.00 in Falcon Oil Gas on December 8, 2024 and sell it today you would lose (1.00) from holding Falcon Oil Gas or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 33.33% |
| Values | Daily Returns |
Reliance Global Group vs. Falcon Oil Gas
Performance |
| Timeline |
| Reliance Global Group |
Risk-Adjusted Performance
Good
Weak | Strong |
| Falcon Oil Gas |
Reliance Global and Falcon Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reliance Global and Falcon Oil
The main advantage of trading using opposite Reliance Global and Falcon Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reliance Global position performs unexpectedly, Falcon Oil can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Falcon Oil will offset losses from the drop in Falcon Oil's long position.The idea behind Reliance Global Group and Falcon Oil Gas pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Falcon Oil vs. Gulf Keystone Petroleum | ||
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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