Correlation Between FCS Software and Spencers Retail

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

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

Diversification Opportunities for FCS Software and Spencers Retail

0.53

Correlation Coefficient

FCS Software  Spencers Retail

Very weak diversification

The 3 months correlation between FCS and Spencers is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding FCS Software Solutions and Spencers Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spencers Retail and FCS Software 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 FCS Software Solutions 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 FCS Software i.e., FCS Software and Spencers Retail go up and down completely randomly.

Pair Corralation between FCS Software and Spencers Retail

Assuming the 90 days trading horizon FCS Software Solutions is expected to generate 1.07 times more return on investment than Spencers Retail. However, FCS Software is 1.07 times more volatile than Spencers Retail Limited. It trades about -0.03 of its potential returns per unit of risk. Spencers Retail Limited is currently generating about -0.07 per unit of risk. If you would invest  366.00  in FCS Software Solutions on September 4, 2024 and sell it today you would lose (27.00) from holding FCS Software Solutions or give up 7.38% of portfolio value over 90 days.

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

FCS Software Solutions  vs.  Spencers Retail Limited

FCS Software Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FCS Software Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, FCS Software is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

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 unsteady 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.

Pair Trading with FCS Software and Spencers Retail

The main advantage of trading using opposite FCS Software and Spencers Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FCS Software 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 FCS Software Solutions 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.