Correlation Between Iris Clothings and V Mart

Can any of the company-specific risk be diversified away by investing in both Iris Clothings and V Mart 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 Iris Clothings and V Mart into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Iris Clothings and V Mart

0.32

Correlation Coefficient

Iris Clothings  V Mart

Weak diversification

The 3 months correlation between Iris and VMART is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Iris Clothings Limited and V Mart Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on V Mart Retail and Iris Clothings 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 Iris Clothings Limited are associated (or correlated) with V Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of V Mart Retail has no effect on the direction of Iris Clothings i.e., Iris Clothings and V Mart go up and down completely randomly.

Pair Corralation between Iris Clothings and V Mart

Assuming the 90 days trading horizon Iris Clothings Limited is expected to under-perform the V Mart. But the stock apears to be less risky and, when comparing its historical volatility, Iris Clothings Limited is 1.5 times less risky than V Mart. The stock trades about -0.12 of its potential returns per unit of risk. The V Mart Retail Limited is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  393,730  in V Mart Retail Limited on September 25, 2024 and sell it today you would lose (8,040) from holding V Mart Retail Limited or give up 2.04% of portfolio value over 90 days.

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

Iris Clothings Limited  vs.  V Mart Retail Limited

Iris Clothings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iris Clothings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting 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.

V Mart Retail

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Iris Clothings and V Mart

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

The idea behind Iris Clothings Limited and V Mart 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.