Correlation Between Coromandel International and Spencers Retail

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

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

Diversification Opportunities for Coromandel International and Spencers Retail

-0.68

Correlation Coefficient

Coromandel International  Spencers Retail

Excellent diversification

The 3 months correlation between Coromandel and Spencers is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Coromandel International Limit and Spencers Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spencers Retail and Coromandel International 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 Coromandel International Limited are associated (or correlated) with Spencers Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spencers Retail has no effect on the direction of Coromandel International i.e., Coromandel International and Spencers Retail go up and down completely randomly.

Pair Corralation between Coromandel International and Spencers Retail

Assuming the 90 days trading horizon Coromandel International Limited is expected to generate 0.49 times more return on investment than Spencers Retail. However, Coromandel International Limited is 2.02 times less risky than Spencers Retail. It trades about 0.12 of its potential returns per unit of risk. Spencers Retail Limited is currently generating about 0.03 per unit of risk. If you would invest  85,223  in Coromandel International Limited on October 11, 2024 and sell it today you would earn a total of  108,542  from holding Coromandel International Limited or generate 127.36% return on investment over 90 days.

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

Coromandel International Limit  vs.  Spencers Retail Limited

Coromandel International

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Coromandel International Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Coromandel International displayed solid returns over the last few months and may actually be approaching a breakup point.

Spencers Retail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spencers Retail Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Coromandel International and Spencers Retail

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

The idea behind Coromandel International Limited and Spencers Retail 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.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.