Correlation Between Spencers Retail and Punjab Sind

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

Diversification Opportunities for Spencers Retail and Punjab Sind

0.64

Correlation Coefficient

Spencers Retail  Punjab Sind

Poor diversification

The 3 months correlation between Spencers and Punjab is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Spencers Retail Limited and Punjab Sind Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Punjab Sind Bank 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 Punjab Sind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Punjab Sind Bank has no effect on the direction of Spencers Retail i.e., Spencers Retail and Punjab Sind go up and down completely randomly.

Pair Corralation between Spencers Retail and Punjab Sind

Assuming the 90 days trading horizon Spencers Retail Limited is expected to under-perform the Punjab Sind. In addition to that, Spencers Retail is 1.01 times more volatile than Punjab Sind Bank. It trades about -0.01 of its total potential returns per unit of risk. Punjab Sind Bank is currently generating about 0.02 per unit of volatility. If you would invest  4,946  in Punjab Sind Bank on October 23, 2024 and sell it today you would earn a total of  37.00  from holding Punjab Sind Bank or generate 0.75% return on investment over 90 days.

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

Spencers Retail Limited  vs.  Punjab Sind Bank

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.

Punjab Sind Bank

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Punjab Sind Bank are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Punjab Sind is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Spencers Retail and Punjab Sind

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

The idea behind Spencers Retail Limited and Punjab Sind Bank 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.