Working Capital Management at Reliance Industries Limited

skzzInvestors have historically used simple risk adherent strategies in their portfolios such as diversifying across countries and including gold or oil investments because these two investments typically had an inverse relationship with stock market movements. Technology has changed the environment where there are very few obstacles to hinder investors to buy or sell assets anywhere in the world today. There are also many other options for investors to use for risk aversion so that gold or oil might be considered as merely another commodity. This study investigated the relationships between gold, oil, and various international stock indexes. The results show that there is a strong, positive association between the international stock indexes. There are also significant positive relationships between oil and stock prices, while gold's expected inverse relationship with stock prices has changed over time. The positive relationships suggest that some traditional portfolio risk techniques may no longer be valid.

Keywords: Gold; Oil; Stock Indexes; International Stock Indexes; Gold Prices, Oil Prices.

1. INTRODUCTION

Investors typically include investments in their portfolios that have historically exhibited inverse relationships with stock market movements as risk insurance. Gold investments, both direct and indirect, have fit this requirement for many years. Gold historically combated losses that occurred during period of inflation, social unrest, and war when stock prices fell. During crises such as these, gold prices soared as stock prices tumbled. Indirect gold investments such as gold mining stocks often fared even better than direct gold investments during these times as rising gold prices could turn many unprofitable or marginally profitable gold mines into moneymakers. Financial advisors were often quick to advise investors to maintain a position in gold during trying times. Conversely, during boom times, gold investments often decreased in value as stock...