Correlation Between Gujarat Lease and Spencers Retail

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

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

Diversification Opportunities for Gujarat Lease and Spencers Retail

-0.25

Correlation Coefficient

Gujarat Lease  Spencers Retail

Very good diversification

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

Pair Corralation between Gujarat Lease and Spencers Retail

Assuming the 90 days trading horizon Gujarat Lease Financing is expected to generate 0.79 times more return on investment than Spencers Retail. However, Gujarat Lease Financing is 1.27 times less risky than Spencers Retail. It trades about 0.1 of its potential returns per unit of risk. Spencers Retail Limited is currently generating about -0.01 per unit of risk. If you would invest  435.00  in Gujarat Lease Financing on September 21, 2024 and sell it today you would earn a total of  334.00  from holding Gujarat Lease Financing or generate 76.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.19%
Values	Daily Returns

Gujarat Lease Financing  vs.  Spencers Retail Limited

Gujarat Lease Financing

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gujarat Lease Financing are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Gujarat Lease may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 uncertain performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Gujarat Lease and Spencers Retail

The main advantage of trading using opposite Gujarat Lease and Spencers Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gujarat Lease 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 Gujarat Lease Financing 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.