Correlation Between Kilitch Drugs and Spencers Retail

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

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

Diversification Opportunities for Kilitch Drugs and Spencers Retail

0.72

Correlation Coefficient

Kilitch Drugs  Spencers Retail

Poor diversification

The 3 months correlation between Kilitch and Spencers is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Kilitch Drugs Limited and Spencers Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spencers Retail and Kilitch Drugs 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 Kilitch Drugs Limited 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 Kilitch Drugs i.e., Kilitch Drugs and Spencers Retail go up and down completely randomly.

Pair Corralation between Kilitch Drugs and Spencers Retail

Assuming the 90 days trading horizon Kilitch Drugs Limited is expected to generate 0.96 times more return on investment than Spencers Retail. However, Kilitch Drugs Limited is 1.05 times less risky than Spencers Retail. It trades about -0.01 of its potential returns per unit of risk. Spencers Retail Limited is currently generating about -0.06 per unit of risk. If you would invest  33,010  in Kilitch Drugs Limited on September 3, 2024 and sell it today you would lose (1,450) from holding Kilitch Drugs Limited or give up 4.39% of portfolio value over 90 days.

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

Kilitch Drugs Limited  vs.  Spencers Retail Limited

Kilitch Drugs Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kilitch Drugs Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Kilitch Drugs is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

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 latest conflicting 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.

Pair Trading with Kilitch Drugs and Spencers Retail

The main advantage of trading using opposite Kilitch Drugs and Spencers Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kilitch Drugs 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 Kilitch Drugs Limited 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..