Correlation Between Refex Industries and V Mart

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

Diversification Opportunities for Refex Industries and V Mart

0.1

Correlation Coefficient

Refex Industries  V Mart

Average diversification

The 3 months correlation between Refex and VMART is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Refex Industries Limited and V Mart Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on V Mart Retail 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 V Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of V Mart Retail has no effect on the direction of Refex Industries i.e., Refex Industries and V Mart go up and down completely randomly.

Pair Corralation between Refex Industries and V Mart

Assuming the 90 days trading horizon Refex Industries Limited is expected to generate 1.43 times more return on investment than V Mart. However, Refex Industries is 1.43 times more volatile than V Mart Retail Limited. It trades about 0.08 of its potential returns per unit of risk. V Mart Retail Limited is currently generating about -0.04 per unit of risk. If you would invest  47,040  in Refex Industries Limited on September 23, 2024 and sell it today you would earn a total of  1,850  from holding Refex Industries Limited or generate 3.93% return on investment over 90 days.

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

Refex Industries Limited  vs.  V Mart Retail Limited

Refex Industries

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Refex Industries Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Refex Industries is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

V Mart Retail

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Refex Industries and V Mart

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

The idea behind Refex Industries Limited and V Mart 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.