Correlation Between Cantabil Retail and Refex Industries

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

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

Diversification Opportunities for Cantabil Retail and Refex Industries

-0.01

Correlation Coefficient

Cantabil Retail  Refex Industries

Good diversification

The 3 months correlation between Cantabil and Refex is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Cantabil Retail India and Refex Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Refex Industries and Cantabil Retail 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 Cantabil Retail India are associated (or correlated) with Refex Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Refex Industries has no effect on the direction of Cantabil Retail i.e., Cantabil Retail and Refex Industries go up and down completely randomly.

Pair Corralation between Cantabil Retail and Refex Industries

Assuming the 90 days trading horizon Cantabil Retail India is expected to generate 1.58 times more return on investment than Refex Industries. However, Cantabil Retail is 1.58 times more volatile than Refex Industries Limited. It trades about 0.35 of its potential returns per unit of risk. Refex Industries Limited is currently generating about -0.26 per unit of risk. If you would invest  24,344  in Cantabil Retail India on October 10, 2024 and sell it today you would earn a total of  6,086  from holding Cantabil Retail India or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Cantabil Retail India  vs.  Refex Industries Limited

Cantabil Retail India

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cantabil Retail India are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent fundamental drivers, Cantabil Retail demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Refex Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Refex Industries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Refex Industries is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Cantabil Retail and Refex Industries

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

The idea behind Cantabil Retail India and Refex 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.