Correlation Between Spencers Retail and Quess Corp

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

Diversification Opportunities for Spencers Retail and Quess Corp

0.87

Correlation Coefficient

Spencers Retail  Quess Corp

Very poor diversification

The 3 months correlation between Spencers and Quess is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Spencers Retail Limited and Quess Corp Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quess Corp 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 Quess Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quess Corp Limited has no effect on the direction of Spencers Retail i.e., Spencers Retail and Quess Corp go up and down completely randomly.

Pair Corralation between Spencers Retail and Quess Corp

Assuming the 90 days trading horizon Spencers Retail Limited is expected to under-perform the Quess Corp. In addition to that, Spencers Retail is 1.21 times more volatile than Quess Corp Limited. It trades about -0.07 of its total potential returns per unit of risk. Quess Corp Limited is currently generating about -0.08 per unit of volatility. If you would invest  81,248  in Quess Corp Limited on September 4, 2024 and sell it today you would lose (10,393) from holding Quess Corp Limited or give up 12.79% of portfolio value over 90 days.

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

Spencers Retail Limited  vs.  Quess Corp 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 unsteady 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.

Quess Corp Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quess Corp Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Spencers Retail and Quess Corp

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

The idea behind Spencers Retail Limited and Quess Corp 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.