Correlation Between Spencers Retail and Indo Borax

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

Diversification Opportunities for Spencers Retail and Indo Borax

0.7

Correlation Coefficient

Spencers Retail  Indo Borax

Poor diversification

The 3 months correlation between Spencers and Indo is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Spencers Retail Limited and Indo Borax Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indo Borax Chemicals 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 Indo Borax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indo Borax Chemicals has no effect on the direction of Spencers Retail i.e., Spencers Retail and Indo Borax go up and down completely randomly.

Pair Corralation between Spencers Retail and Indo Borax

Assuming the 90 days trading horizon Spencers Retail Limited is expected to generate 0.95 times more return on investment than Indo Borax. However, Spencers Retail Limited is 1.05 times less risky than Indo Borax. It trades about -0.07 of its potential returns per unit of risk. Indo Borax Chemicals is currently generating about -0.07 per unit of risk. If you would invest  10,056  in Spencers Retail Limited on October 9, 2024 and sell it today you would lose (1,283) from holding Spencers Retail Limited or give up 12.76% 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.  Indo Borax Chemicals

Spencers Retail

Risk-Adjusted Performance

0 of 100

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 inconsistent 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.

Indo Borax Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Spencers Retail and Indo Borax

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

The idea behind Spencers Retail Limited and Indo Borax Chemicals 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.