Correlation Between Garware Hi and Spencers Retail

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

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

Diversification Opportunities for Garware Hi and Spencers Retail

-0.32

Correlation Coefficient

Garware Hi  Spencers Retail

Very good diversification

The 3 months correlation between Garware and Spencers is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Garware Hi Tech Films and Spencers Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spencers Retail and Garware Hi 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 Garware Hi Tech Films 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 Garware Hi i.e., Garware Hi and Spencers Retail go up and down completely randomly.

Pair Corralation between Garware Hi and Spencers Retail

Assuming the 90 days trading horizon Garware Hi Tech Films is expected to under-perform the Spencers Retail. But the stock apears to be less risky and, when comparing its historical volatility, Garware Hi Tech Films is 1.34 times less risky than Spencers Retail. The stock trades about -0.44 of its potential returns per unit of risk. The Spencers Retail Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  8,205  in Spencers Retail Limited on October 26, 2024 and sell it today you would earn a total of  110.00  from holding Spencers Retail Limited or generate 1.34% return on investment over 90 days.

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

Garware Hi Tech Films  vs.  Spencers Retail Limited

Garware Hi Tech

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Garware Hi Tech Films are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Garware Hi may actually be approaching a critical reversion point that can send shares even higher in February 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 relatively invariable technical and fundamental indicators, Spencers Retail is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Garware Hi and Spencers Retail

The main advantage of trading using opposite Garware Hi and Spencers Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garware Hi 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 Garware Hi Tech Films 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.