Correlation Between Generic Engineering and Spencers Retail

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

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

Diversification Opportunities for Generic Engineering and Spencers Retail

0.17

Correlation Coefficient

Generic Engineering  Spencers Retail

Average diversification

The 3 months correlation between Generic and Spencers is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Generic Engineering Constructi and Spencers Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spencers Retail and Generic Engineering 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 Generic Engineering Construction 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 Generic Engineering i.e., Generic Engineering and Spencers Retail go up and down completely randomly.

Pair Corralation between Generic Engineering and Spencers Retail

Assuming the 90 days trading horizon Generic Engineering Construction is expected to generate 1.05 times more return on investment than Spencers Retail. However, Generic Engineering is 1.05 times more volatile than Spencers Retail Limited. It trades about 0.02 of its potential returns per unit of risk. Spencers Retail Limited is currently generating about 0.0 per unit of risk. If you would invest  4,155  in Generic Engineering Construction on October 9, 2024 and sell it today you would earn a total of  49.00  from holding Generic Engineering Construction or generate 1.18% return on investment over 90 days.

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

Generic Engineering Constructi  vs.  Spencers Retail Limited

Generic Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Generic Engineering Construction has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Generic Engineering is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the 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 latest inconsistent 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 Generic Engineering and Spencers Retail

The main advantage of trading using opposite Generic Engineering and Spencers Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Generic Engineering 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 Generic Engineering Construction 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.