Correlation Between Spencers Retail and Kalpataru Projects

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

Diversification Opportunities for Spencers Retail and Kalpataru Projects

0.09

Correlation Coefficient

Spencers Retail  Kalpataru Projects

Significant diversification

The 3 months correlation between Spencers and Kalpataru is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Spencers Retail Limited and Kalpataru Projects Internation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalpataru Projects 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 Kalpataru Projects. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kalpataru Projects has no effect on the direction of Spencers Retail i.e., Spencers Retail and Kalpataru Projects go up and down completely randomly.

Pair Corralation between Spencers Retail and Kalpataru Projects

Assuming the 90 days trading horizon Spencers Retail Limited is expected to generate 2.37 times more return on investment than Kalpataru Projects. However, Spencers Retail is 2.37 times more volatile than Kalpataru Projects International. It trades about 0.06 of its potential returns per unit of risk. Kalpataru Projects International is currently generating about -0.2 per unit of risk. If you would invest  8,186  in Spencers Retail Limited on October 22, 2024 and sell it today you would earn a total of  255.00  from holding Spencers Retail Limited or generate 3.12% return on investment over 90 days.

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

Spencers Retail Limited  vs.  Kalpataru Projects Internation

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 relatively invariable technical and fundamental indicators, Spencers Retail is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Kalpataru Projects

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kalpataru Projects International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Kalpataru Projects is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Spencers Retail and Kalpataru Projects

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

The idea behind Spencers Retail Limited and Kalpataru Projects International 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.