Correlation Between Speciality Restaurants and Mcleod Russel

Can any of the company-specific risk be diversified away by investing in both Speciality Restaurants and Mcleod Russel 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 Speciality Restaurants and Mcleod Russel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Speciality Restaurants Limited and Mcleod Russel India, you can compare the effects of market volatilities on Speciality Restaurants and Mcleod Russel 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 Speciality Restaurants with a short position of Mcleod Russel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Speciality Restaurants and Mcleod Russel.

Diversification Opportunities for Speciality Restaurants and Mcleod Russel

0.58

Correlation Coefficient

Speciality Restaurants  Mcleod Russel

Very weak diversification

The 3 months correlation between Speciality and Mcleod is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Speciality Restaurants Limited and Mcleod Russel India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mcleod Russel India and Speciality Restaurants 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 Speciality Restaurants Limited are associated (or correlated) with Mcleod Russel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mcleod Russel India has no effect on the direction of Speciality Restaurants i.e., Speciality Restaurants and Mcleod Russel go up and down completely randomly.

Pair Corralation between Speciality Restaurants and Mcleod Russel

Assuming the 90 days trading horizon Speciality Restaurants Limited is expected to generate 0.77 times more return on investment than Mcleod Russel. However, Speciality Restaurants Limited is 1.3 times less risky than Mcleod Russel. It trades about -0.03 of its potential returns per unit of risk. Mcleod Russel India is currently generating about -0.08 per unit of risk. If you would invest  14,294  in Speciality Restaurants Limited on December 30, 2024 and sell it today you would lose (1,221) from holding Speciality Restaurants Limited or give up 8.54% of portfolio value over 90 days.

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

Speciality Restaurants Limited  vs.  Mcleod Russel India

Speciality Restaurants

Risk-Adjusted Performance

Very Weak

Over the last 90 days Speciality Restaurants Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, Speciality Restaurants is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Mcleod Russel India

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mcleod Russel India has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Speciality Restaurants and Mcleod Russel

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

The idea behind Speciality Restaurants Limited and Mcleod Russel India 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.