Correlation Between Refex Industries and Barbeque Nation

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

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

Diversification Opportunities for Refex Industries and Barbeque Nation

-0.19

Correlation Coefficient

Refex Industries  Barbeque Nation

Good diversification

The 3 months correlation between Refex and Barbeque is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Refex Industries Limited and Barbeque Nation Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barbeque Nation Hosp and Refex Industries 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 Refex Industries Limited are associated (or correlated) with Barbeque Nation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barbeque Nation Hosp has no effect on the direction of Refex Industries i.e., Refex Industries and Barbeque Nation go up and down completely randomly.

Pair Corralation between Refex Industries and Barbeque Nation

Assuming the 90 days trading horizon Refex Industries Limited is expected to generate 1.19 times more return on investment than Barbeque Nation. However, Refex Industries is 1.19 times more volatile than Barbeque Nation Hospitality. It trades about -0.26 of its potential returns per unit of risk. Barbeque Nation Hospitality is currently generating about -0.54 per unit of risk. If you would invest  54,600  in Refex Industries Limited on October 10, 2024 and sell it today you would lose (5,710) from holding Refex Industries Limited or give up 10.46% of portfolio value over 90 days.

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

Refex Industries Limited  vs.  Barbeque Nation Hospitality

Refex Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Refex Industries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Refex Industries is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Barbeque Nation Hosp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barbeque Nation Hospitality has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Refex Industries and Barbeque Nation

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

The idea behind Refex Industries Limited and Barbeque Nation Hospitality 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.