Correlation Between Sukhjit Starch and Spencers Retail

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Can any of the company-specific risk be diversified away by investing in both Sukhjit Starch and Spencers Retail 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 Sukhjit Starch and Spencers Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sukhjit Starch Chemicals and Spencers Retail Limited, you can compare the effects of market volatilities on Sukhjit Starch and Spencers Retail 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 Sukhjit Starch with a short position of Spencers Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sukhjit Starch and Spencers Retail.

Diversification Opportunities for Sukhjit Starch and Spencers Retail

0.31
  Correlation Coefficient

Weak diversification

The 3 months correlation between Sukhjit and Spencers is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sukhjit Starch Chemicals and Spencers Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spencers Retail and Sukhjit Starch 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 Sukhjit Starch Chemicals are associated (or correlated) with Spencers Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spencers Retail has no effect on the direction of Sukhjit Starch i.e., Sukhjit Starch and Spencers Retail go up and down completely randomly.

Pair Corralation between Sukhjit Starch and Spencers Retail

Assuming the 90 days trading horizon Sukhjit Starch Chemicals is expected to generate 2.14 times more return on investment than Spencers Retail. However, Sukhjit Starch is 2.14 times more volatile than Spencers Retail Limited. It trades about 0.04 of its potential returns per unit of risk. Spencers Retail Limited is currently generating about 0.04 per unit of risk. If you would invest  20,059  in Sukhjit Starch Chemicals on October 5, 2024 and sell it today you would earn a total of  7,071  from holding Sukhjit Starch Chemicals or generate 35.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy99.67%
ValuesDaily Returns

Sukhjit Starch Chemicals  vs.  Spencers Retail Limited

 Performance 
       Timeline  
Sukhjit Starch Chemicals 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Sukhjit Starch Chemicals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Sukhjit Starch may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Spencers Retail 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 latest uncertain performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Sukhjit Starch and Spencers Retail Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sukhjit Starch and Spencers Retail

The main advantage of trading using opposite Sukhjit Starch and Spencers Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sukhjit Starch position performs unexpectedly, Spencers Retail 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 Spencers Retail will offset losses from the drop in Spencers Retail's long position.
The idea behind Sukhjit Starch Chemicals and Spencers Retail 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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