Correlation Between Spencers Retail and Orient Technologies

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

Diversification Opportunities for Spencers Retail and Orient Technologies

SpencersOrientDiversified AwaySpencersOrientDiversified Away100%
-0.78
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Spencers and Orient is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Spencers Retail Limited and Orient Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orient Technologies 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 Orient Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orient Technologies has no effect on the direction of Spencers Retail i.e., Spencers Retail and Orient Technologies go up and down completely randomly.

Pair Corralation between Spencers Retail and Orient Technologies

Assuming the 90 days trading horizon Spencers Retail Limited is expected to under-perform the Orient Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Spencers Retail Limited is 1.69 times less risky than Orient Technologies. The stock trades about -0.13 of its potential returns per unit of risk. The Orient Technologies Limited is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  30,426  in Orient Technologies Limited on September 23, 2024 and sell it today you would earn a total of  13,454  from holding Orient Technologies Limited or generate 44.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Spencers Retail Limited  vs.  Orient Technologies Limited

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -1001020304050
JavaScript chart by amCharts 3.21.15SPENCERS ORIENTTECH
       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 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 January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec80859095100105110
Orient Technologies 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Orient Technologies Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Orient Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec250300350400450500

Spencers Retail and Orient Technologies Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.67-3.5-2.32-1.150.01.062.153.244.335.42 0.0250.0300.0350.0400.0450.050
JavaScript chart by amCharts 3.21.15SPENCERS ORIENTTECH
       Returns  

Pair Trading with Spencers Retail and Orient Technologies

The main advantage of trading using opposite Spencers Retail and Orient Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spencers Retail position performs unexpectedly, Orient Technologies 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 Orient Technologies will offset losses from the drop in Orient Technologies' long position.
The idea behind Spencers Retail Limited and Orient Technologies 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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