Correlation Between Refex Industries and Zodiac Clothing

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

Diversification Opportunities for Refex Industries and Zodiac Clothing

0.42

Correlation Coefficient

Refex Industries  Zodiac Clothing

Very weak diversification

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

Pair Corralation between Refex Industries and Zodiac Clothing

Assuming the 90 days trading horizon Refex Industries Limited is expected to generate 1.29 times more return on investment than Zodiac Clothing. However, Refex Industries is 1.29 times more volatile than Zodiac Clothing. It trades about -0.09 of its potential returns per unit of risk. Zodiac Clothing is currently generating about -0.23 per unit of risk. If you would invest  48,645  in Refex Industries Limited on October 23, 2024 and sell it today you would lose (2,600) from holding Refex Industries Limited or give up 5.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Refex Industries Limited  vs.  Zodiac Clothing

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 current stock price disarray, may contribute to short-term losses for the investors.

Zodiac Clothing

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zodiac Clothing are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Zodiac Clothing may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Refex Industries and Zodiac Clothing

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

The idea behind Refex Industries Limited and Zodiac Clothing 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.