Correlation Between Spencers Retail and PB Fintech

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

Diversification Opportunities for Spencers Retail and PB Fintech

-0.2

Correlation Coefficient

Spencers Retail  PB Fintech

Good diversification

The 3 months correlation between Spencers and POLICYBZR is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Spencers Retail Limited and PB Fintech Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PB Fintech 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 PB Fintech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PB Fintech Limited has no effect on the direction of Spencers Retail i.e., Spencers Retail and PB Fintech go up and down completely randomly.

Pair Corralation between Spencers Retail and PB Fintech

Assuming the 90 days trading horizon Spencers Retail is expected to generate 4.35 times less return on investment than PB Fintech. In addition to that, Spencers Retail is 1.05 times more volatile than PB Fintech Limited. It trades about 0.11 of its total potential returns per unit of risk. PB Fintech Limited is currently generating about 0.51 per unit of volatility. If you would invest  171,985  in PB Fintech Limited on September 19, 2024 and sell it today you would earn a total of  41,360  from holding PB Fintech Limited or generate 24.05% return on investment over 90 days.

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

Spencers Retail Limited  vs.  PB Fintech Limited

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 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.

PB Fintech Limited

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PB Fintech Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental drivers, PB Fintech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Spencers Retail and PB Fintech

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

The idea behind Spencers Retail Limited and PB Fintech 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.