Correlation Between Speciality Restaurants and Raj Rayon

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

Diversification Opportunities for Speciality Restaurants and Raj Rayon

0.69

Correlation Coefficient

Speciality Restaurants  Raj Rayon

Poor diversification

The 3 months correlation between Speciality and Raj is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Speciality Restaurants Limited and Raj Rayon Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raj Rayon Industries 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 Raj Rayon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raj Rayon Industries has no effect on the direction of Speciality Restaurants i.e., Speciality Restaurants and Raj Rayon go up and down completely randomly.

Pair Corralation between Speciality Restaurants and Raj Rayon

Assuming the 90 days trading horizon Speciality Restaurants Limited is expected to generate 1.32 times more return on investment than Raj Rayon. However, Speciality Restaurants is 1.32 times more volatile than Raj Rayon Industries. It trades about -0.07 of its potential returns per unit of risk. Raj Rayon Industries is currently generating about -0.2 per unit of risk. If you would invest  17,106  in Speciality Restaurants Limited on September 5, 2024 and sell it today you would lose (1,614) from holding Speciality Restaurants Limited or give up 9.44% of portfolio value over 90 days.

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

Speciality Restaurants Limited  vs.  Raj Rayon Industries

Speciality Restaurants

Risk-Adjusted Performance

0 of 100

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 latest unsteady performance, the Stock's forward indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Raj Rayon Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Raj Rayon Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Speciality Restaurants and Raj Rayon

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

The idea behind Speciality Restaurants Limited and Raj Rayon Industries 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.