Correlation Between Reliance Industries and Magnora ASA
Can any of the company-specific risk be diversified away by investing in both Reliance Industries and Magnora ASA 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 Industries and Magnora ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reliance Industries Ltd and Magnora ASA, you can compare the effects of market volatilities on Reliance Industries and Magnora ASA 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 Industries with a short position of Magnora ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reliance Industries and Magnora ASA.
Diversification Opportunities for Reliance Industries and Magnora ASA
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Reliance and Magnora is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Industries Ltd and Magnora ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnora ASA and Reliance Industries 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 Industries Ltd are associated (or correlated) with Magnora ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnora ASA has no effect on the direction of Reliance Industries i.e., Reliance Industries and Magnora ASA go up and down completely randomly.
Pair Corralation between Reliance Industries and Magnora ASA
Assuming the 90 days trading horizon Reliance Industries is expected to generate 30.52 times less return on investment than Magnora ASA. But when comparing it to its historical volatility, Reliance Industries Ltd is 1.83 times less risky than Magnora ASA. It trades about 0.01 of its potential returns per unit of risk. Magnora ASA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,515 in Magnora ASA on September 18, 2024 and sell it today you would earn a total of 95.00 from holding Magnora ASA or generate 3.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reliance Industries Ltd vs. Magnora ASA
Performance |
| Timeline |
| Reliance Industries |
| Magnora ASA |
Reliance Industries and Magnora ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reliance Industries and Magnora ASA
The main advantage of trading using opposite Reliance Industries and Magnora ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reliance Industries position performs unexpectedly, Magnora ASA 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 Magnora ASA will offset losses from the drop in Magnora ASA's long position.| Reliance Industries vs. Wyndham Hotels Resorts | Reliance Industries vs. The Mercantile Investment | Reliance Industries vs. Extra Space Storage | Reliance Industries vs. Taylor Maritime Investments |
| Magnora ASA vs. Samsung Electronics Co | Magnora ASA vs. Samsung Electronics Co | Magnora ASA vs. Hyundai Motor | Magnora ASA vs. Reliance Industries Ltd |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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