Correlation Between V2 Retail and Refex Industries

Can any of the company-specific risk be diversified away by investing in both V2 Retail 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 V2 Retail and Refex Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between V2 Retail Limited and Refex Industries Limited, you can compare the effects of market volatilities on V2 Retail 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 V2 Retail with a short position of Refex Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of V2 Retail and Refex Industries.

Diversification Opportunities for V2 Retail and Refex Industries

-0.15

Correlation Coefficient

V2 Retail  Refex Industries

Good diversification

The 3 months correlation between V2RETAIL and Refex is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding V2 Retail Limited and Refex Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Refex Industries and V2 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 V2 Retail Limited 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 V2 Retail i.e., V2 Retail and Refex Industries go up and down completely randomly.

Pair Corralation between V2 Retail and Refex Industries

Assuming the 90 days trading horizon V2 Retail Limited is expected to generate 0.79 times more return on investment than Refex Industries. However, V2 Retail Limited is 1.27 times less risky than Refex Industries. It trades about 0.23 of its potential returns per unit of risk. Refex Industries Limited is currently generating about 0.14 per unit of risk. If you would invest  35,770  in V2 Retail Limited on October 24, 2024 and sell it today you would earn a total of  143,050  from holding V2 Retail Limited or generate 399.92% return on investment over 90 days.

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

V2 Retail Limited  vs.  Refex Industries Limited

V2 Retail Limited

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in V2 Retail Limited are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, V2 Retail demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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 V2 Retail and Refex Industries

The main advantage of trading using opposite V2 Retail and Refex Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if V2 Retail 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 V2 Retail Limited 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.