Correlation Between Spentex Industries and Industrial Investment

Can any of the company-specific risk be diversified away by investing in both Spentex Industries and Industrial Investment 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 Spentex Industries and Industrial Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Spentex Industries Limited and Industrial Investment Trust, you can compare the effects of market volatilities on Spentex Industries and Industrial Investment 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 Spentex Industries with a short position of Industrial Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spentex Industries and Industrial Investment.

Diversification Opportunities for Spentex Industries and Industrial Investment

0.0

Correlation Coefficient

Spentex Industries  Industrial Investment

Pay attention - limited upside

The 3 months correlation between Spentex and Industrial is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Spentex Industries Limited and Industrial Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Investment and Spentex Industries 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 Spentex Industries Limited are associated (or correlated) with Industrial Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Investment has no effect on the direction of Spentex Industries i.e., Spentex Industries and Industrial Investment go up and down completely randomly.

Pair Corralation between Spentex Industries and Industrial Investment

If you would invest  29,500  in Industrial Investment Trust on October 7, 2024 and sell it today you would earn a total of  3,215  from holding Industrial Investment Trust or generate 10.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Spentex Industries Limited  vs.  Industrial Investment Trust

Spentex Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spentex Industries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Spentex Industries is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Industrial Investment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Investment Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Industrial Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Spentex Industries and Industrial Investment

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

The idea behind Spentex Industries Limited and Industrial Investment Trust 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.