Correlation Between Reliance Industries and Catena Media
Can any of the company-specific risk be diversified away by investing in both Reliance Industries and Catena Media 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 Catena Media 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 Catena Media PLC, you can compare the effects of market volatilities on Reliance Industries and Catena Media 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 Catena Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reliance Industries and Catena Media.
Diversification Opportunities for Reliance Industries and Catena Media
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Reliance and Catena is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Industries Ltd and Catena Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catena Media PLC 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 Catena Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catena Media PLC has no effect on the direction of Reliance Industries i.e., Reliance Industries and Catena Media go up and down completely randomly.
Pair Corralation between Reliance Industries and Catena Media
Assuming the 90 days trading horizon Reliance Industries Ltd is expected to under-perform the Catena Media. But the stock apears to be less risky and, when comparing its historical volatility, Reliance Industries Ltd is 3.58 times less risky than Catena Media. The stock trades about -0.09 of its potential returns per unit of risk. The Catena Media PLC is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 589.00 in Catena Media PLC on September 14, 2024 and sell it today you would lose (125.00) from holding Catena Media PLC or give up 21.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reliance Industries Ltd vs. Catena Media PLC
Performance |
| Timeline |
| Reliance Industries |
| Catena Media PLC |
Reliance Industries and Catena Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reliance Industries and Catena Media
The main advantage of trading using opposite Reliance Industries and Catena Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reliance Industries position performs unexpectedly, Catena Media 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 Catena Media will offset losses from the drop in Catena Media's long position.| Reliance Industries vs. Tyson Foods Cl | Reliance Industries vs. National Beverage Corp | Reliance Industries vs. Blackrock World Mining | Reliance Industries vs. Associated British Foods |
| Catena Media vs. Regions Financial Corp | Catena Media vs. Broadridge Financial Solutions | Catena Media vs. Sydbank | Catena Media vs. Southwest Airlines Co |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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