Correlation Between Refex Industries and Spencers Retail

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

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

Diversification Opportunities for Refex Industries and Spencers Retail

0.23

Correlation Coefficient

Refex Industries  Spencers Retail

Modest diversification

The 3 months correlation between Refex and Spencers is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Refex Industries 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 Refex Industries 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 Refex Industries 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 Refex Industries i.e., Refex Industries and Spencers Retail go up and down completely randomly.

Pair Corralation between Refex Industries and Spencers Retail

Assuming the 90 days trading horizon Refex Industries Limited is expected to generate 0.87 times more return on investment than Spencers Retail. However, Refex Industries Limited is 1.15 times less risky than Spencers Retail. It trades about -0.09 of its potential returns per unit of risk. Spencers Retail Limited is currently generating about -0.16 per unit of risk. If you would invest  56,270  in Refex Industries Limited on September 28, 2024 and sell it today you would lose (7,275) from holding Refex Industries Limited or give up 12.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Refex Industries Limited  vs.  Spencers Retail Limited

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 latest conflicting performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm 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 inconsistent 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 Refex Industries and Spencers Retail

The main advantage of trading using opposite Refex Industries and Spencers Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Refex Industries 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 Refex Industries 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.