Correlation Between Spencers Retail and Baazar Style

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

Diversification Opportunities for Spencers Retail and Baazar Style

0.82

Correlation Coefficient

Spencers Retail  Baazar Style

Very poor diversification

The 3 months correlation between Spencers and Baazar is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Spencers Retail Limited and Baazar Style Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baazar Style Retail 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 Baazar Style. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baazar Style Retail has no effect on the direction of Spencers Retail i.e., Spencers Retail and Baazar Style go up and down completely randomly.

Pair Corralation between Spencers Retail and Baazar Style

Assuming the 90 days trading horizon Spencers Retail is expected to generate 1.99 times less return on investment than Baazar Style. But when comparing it to its historical volatility, Spencers Retail Limited is 1.41 times less risky than Baazar Style. It trades about 0.04 of its potential returns per unit of risk. Baazar Style Retail is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  31,910  in Baazar Style Retail on September 21, 2024 and sell it today you would earn a total of  875.00  from holding Baazar Style Retail or generate 2.74% return on investment over 90 days.

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

Spencers Retail Limited  vs.  Baazar Style Retail

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 uncertain 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.

Baazar Style Retail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baazar Style Retail has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Baazar Style is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Spencers Retail and Baazar Style

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

The idea behind Spencers Retail Limited and Baazar Style Retail 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .