Correlation Between Intermediate Capital and Reliance Industries

Can any of the company-specific risk be diversified away by investing in both Intermediate Capital and Reliance Industries 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 Intermediate Capital and Reliance Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Intermediate Capital Group and Reliance Industries Limited, you can compare the effects of market volatilities on Intermediate Capital and Reliance Industries 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 Intermediate Capital with a short position of Reliance Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intermediate Capital and Reliance Industries.

Diversification Opportunities for Intermediate Capital and Reliance Industries

0.7

Correlation Coefficient

Intermediate Capital  Reliance Industries

Poor diversification

The 3 months correlation between Intermediate and Reliance is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Capital Group and Reliance Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliance Industries and Intermediate Capital 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 Intermediate Capital Group are associated (or correlated) with Reliance Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliance Industries has no effect on the direction of Intermediate Capital i.e., Intermediate Capital and Reliance Industries go up and down completely randomly.

Pair Corralation between Intermediate Capital and Reliance Industries

Assuming the 90 days trading horizon Intermediate Capital Group is expected to generate 1.11 times more return on investment than Reliance Industries. However, Intermediate Capital is 1.11 times more volatile than Reliance Industries Limited. It trades about 0.21 of its potential returns per unit of risk. Reliance Industries Limited is currently generating about 0.1 per unit of risk. If you would invest  175,488  in Intermediate Capital Group on April 23, 2025 and sell it today you would earn a total of  41,512  from holding Intermediate Capital Group or generate 23.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Intermediate Capital Group  vs.  Reliance Industries Limited

Intermediate Capital

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Intermediate Capital Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Intermediate Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Reliance Industries

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Reliance Industries Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Reliance Industries may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Intermediate Capital and Reliance Industries

The main advantage of trading using opposite Intermediate Capital and Reliance Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intermediate Capital position performs unexpectedly, Reliance Industries 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 Reliance Industries will offset losses from the drop in Reliance Industries' long position.

The idea behind Intermediate Capital Group and Reliance Industries Limited 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.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.