Correlation Between Spencers Retail and Coromandel International

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

Diversification Opportunities for Spencers Retail and Coromandel International

-0.68
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Spencers and Coromandel is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Spencers Retail Limited and Coromandel International Limit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coromandel International 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 Coromandel International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coromandel International has no effect on the direction of Spencers Retail i.e., Spencers Retail and Coromandel International go up and down completely randomly.

Pair Corralation between Spencers Retail and Coromandel International

Assuming the 90 days trading horizon Spencers Retail is expected to generate 1.97 times less return on investment than Coromandel International. In addition to that, Spencers Retail is 2.02 times more volatile than Coromandel International Limited. It trades about 0.03 of its total potential returns per unit of risk. Coromandel International Limited is currently generating about 0.12 per unit of volatility. If you would invest  85,223  in Coromandel International Limited on October 11, 2024 and sell it today you would earn a total of  108,542  from holding Coromandel International Limited or generate 127.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Spencers Retail Limited  vs.  Coromandel International Limit

 Performance 
       Timeline  
Spencers Retail 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 latest fragile performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.
Coromandel International 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Coromandel International Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Coromandel International displayed solid returns over the last few months and may actually be approaching a breakup point.

Spencers Retail and Coromandel International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Spencers Retail and Coromandel International

The main advantage of trading using opposite Spencers Retail and Coromandel International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spencers Retail position performs unexpectedly, Coromandel International 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 Coromandel International will offset losses from the drop in Coromandel International's long position.
The idea behind Spencers Retail Limited and Coromandel International 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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