Correlation Between Spencers Retail and Bosch

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

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

Diversification Opportunities for Spencers Retail and Bosch

0.74

Correlation Coefficient

Spencers Retail  Bosch

Poor diversification

The 3 months correlation between Spencers and Bosch is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Spencers Retail Limited and Bosch Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bosch Limited and Spencers Retail 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 Spencers Retail Limited are associated (or correlated) with Bosch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bosch Limited has no effect on the direction of Spencers Retail i.e., Spencers Retail and Bosch go up and down completely randomly.

Pair Corralation between Spencers Retail and Bosch

Assuming the 90 days trading horizon Spencers Retail Limited is expected to under-perform the Bosch. In addition to that, Spencers Retail is 2.52 times more volatile than Bosch Limited. It trades about -0.08 of its total potential returns per unit of risk. Bosch Limited is currently generating about -0.2 per unit of volatility. If you would invest  3,408,965  in Bosch Limited on December 27, 2024 and sell it today you would lose (601,760) from holding Bosch Limited or give up 17.65% of portfolio value over 90 days.

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

Spencers Retail Limited  vs.  Bosch Limited

Spencers Retail

Risk-Adjusted Performance

Very Weak

Over the last 90 days Spencers Retail Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's technical and fundamental 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.

Bosch Limited

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Spencers Retail and Bosch

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

The idea behind Spencers Retail Limited and Bosch 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.