Correlation Between Refex Industries and Biofil Chemicals

Can any of the company-specific risk be diversified away by investing in both Refex Industries and Biofil Chemicals 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 Biofil Chemicals 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 Biofil Chemicals Pharmaceuticals, you can compare the effects of market volatilities on Refex Industries and Biofil Chemicals 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 Biofil Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Refex Industries and Biofil Chemicals.

Diversification Opportunities for Refex Industries and Biofil Chemicals

0.29

Correlation Coefficient

Refex Industries  Biofil Chemicals

Modest diversification

The 3 months correlation between Refex and Biofil is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Refex Industries Limited and Biofil Chemicals Pharmaceutica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biofil Chemicals Pha 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 Biofil Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biofil Chemicals Pha has no effect on the direction of Refex Industries i.e., Refex Industries and Biofil Chemicals go up and down completely randomly.

Pair Corralation between Refex Industries and Biofil Chemicals

Assuming the 90 days trading horizon Refex Industries Limited is expected to generate 0.83 times more return on investment than Biofil Chemicals. However, Refex Industries Limited is 1.2 times less risky than Biofil Chemicals. It trades about 0.18 of its potential returns per unit of risk. Biofil Chemicals Pharmaceuticals is currently generating about 0.03 per unit of risk. If you would invest  38,070  in Refex Industries Limited on September 4, 2024 and sell it today you would earn a total of  16,410  from holding Refex Industries Limited or generate 43.1% return on investment over 90 days.

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

Refex Industries Limited  vs.  Biofil Chemicals Pharmaceutica

Refex Industries

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Refex Industries Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical and fundamental indicators, Refex Industries displayed solid returns over the last few months and may actually be approaching a breakup point.

Biofil Chemicals Pha

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Biofil Chemicals Pharmaceuticals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Biofil Chemicals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Refex Industries and Biofil Chemicals

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

The idea behind Refex Industries Limited and Biofil Chemicals Pharmaceuticals 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.