Correlation Between ITI and Spentex Industries

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

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

Diversification Opportunities for ITI and Spentex Industries

0.0

Correlation Coefficient

ITI  Spentex Industries

Pay attention - limited upside

The 3 months correlation between ITI and Spentex is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ITI Limited and Spentex Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spentex Industries and ITI 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 ITI Limited are associated (or correlated) with Spentex Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spentex Industries has no effect on the direction of ITI i.e., ITI and Spentex Industries go up and down completely randomly.

Pair Corralation between ITI and Spentex Industries

If you would invest  30,260  in ITI Limited on August 31, 2024 and sell it today you would lose (693.00) from holding ITI Limited or give up 2.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

ITI Limited  vs.  Spentex Industries Limited

ITI Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ITI Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, ITI is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Spentex Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spentex Industries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Spentex Industries is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ITI and Spentex Industries

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

The idea behind ITI Limited and Spentex Industries 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.