Correlation Between Dhunseri Investments and Spencers Retail

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

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

Diversification Opportunities for Dhunseri Investments and Spencers Retail

0.25

Correlation Coefficient

Dhunseri Investments  Spencers Retail

Modest diversification

The 3 months correlation between Dhunseri and Spencers is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Dhunseri Investments Limited and Spencers Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spencers Retail and Dhunseri Investments 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 Dhunseri Investments 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 Dhunseri Investments i.e., Dhunseri Investments and Spencers Retail go up and down completely randomly.

Pair Corralation between Dhunseri Investments and Spencers Retail

Assuming the 90 days trading horizon Dhunseri Investments Limited is expected to under-perform the Spencers Retail. In addition to that, Dhunseri Investments is 1.01 times more volatile than Spencers Retail Limited. It trades about -0.1 of its total potential returns per unit of risk. Spencers Retail Limited is currently generating about -0.01 per unit of volatility. If you would invest  8,880  in Spencers Retail Limited on October 22, 2024 and sell it today you would lose (439.00) from holding Spencers Retail Limited or give up 4.94% of portfolio value over 90 days.

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

Dhunseri Investments Limited  vs.  Spencers Retail Limited

Dhunseri Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dhunseri Investments Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

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 relatively invariable technical and fundamental indicators, Spencers Retail is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Dhunseri Investments and Spencers Retail

The main advantage of trading using opposite Dhunseri Investments and Spencers Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dhunseri Investments 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 Dhunseri Investments 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.

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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 Valuation module to check real value of public entities based on technical and fundamental data.