Correlation Between Refex Industries and UltraTech Cement

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

Diversification Opportunities for Refex Industries and UltraTech Cement

0.42

Correlation Coefficient

Refex Industries  UltraTech Cement

Very weak diversification

The 3 months correlation between Refex and UltraTech is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Refex Industries Limited and UltraTech Cement Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UltraTech Cement 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 UltraTech Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UltraTech Cement has no effect on the direction of Refex Industries i.e., Refex Industries and UltraTech Cement go up and down completely randomly.

Pair Corralation between Refex Industries and UltraTech Cement

Assuming the 90 days trading horizon Refex Industries Limited is expected to under-perform the UltraTech Cement. In addition to that, Refex Industries is 1.63 times more volatile than UltraTech Cement Limited. It trades about -0.13 of its total potential returns per unit of risk. UltraTech Cement Limited is currently generating about 0.01 per unit of volatility. If you would invest  1,141,910  in UltraTech Cement Limited on December 27, 2024 and sell it today you would lose (1,700) from holding UltraTech Cement Limited or give up 0.15% of portfolio value over 90 days.

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

Refex Industries Limited  vs.  UltraTech Cement Limited

Refex Industries

Risk-Adjusted Performance

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 uncertain performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

UltraTech Cement

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Refex Industries and UltraTech Cement

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

The idea behind Refex Industries Limited and UltraTech Cement 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.