Correlation Between Baazar Style and Refex Industries

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

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

Diversification Opportunities for Baazar Style and Refex Industries

0.48

Correlation Coefficient

Baazar Style  Refex Industries

Very weak diversification

The 3 months correlation between Baazar and Refex is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Baazar Style Retail and Refex Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Refex Industries and Baazar Style 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 Baazar Style Retail are associated (or correlated) with Refex Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Refex Industries has no effect on the direction of Baazar Style i.e., Baazar Style and Refex Industries go up and down completely randomly.

Pair Corralation between Baazar Style and Refex Industries

Assuming the 90 days trading horizon Baazar Style Retail is expected to under-perform the Refex Industries. But the stock apears to be less risky and, when comparing its historical volatility, Baazar Style Retail is 1.15 times less risky than Refex Industries. The stock trades about -0.04 of its potential returns per unit of risk. The Refex Industries Limited is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  5,360  in Refex Industries Limited on October 8, 2024 and sell it today you would earn a total of  43,460  from holding Refex Industries Limited or generate 810.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	17.15%
Values	Daily Returns

Baazar Style Retail  vs.  Refex Industries Limited

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 current stock price disturbance, may contribute to short-term losses for the investors.

Refex Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Refex Industries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Refex Industries is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Baazar Style and Refex Industries

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

The idea behind Baazar Style Retail and Refex Industries 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.