Correlation Between Baazar Style and V Mart

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

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

Diversification Opportunities for Baazar Style and V Mart

0.36

Correlation Coefficient

Baazar Style  V Mart

Weak diversification

The 3 months correlation between Baazar and VMART is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Baazar Style Retail 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 Baazar Style 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 Baazar Style Retail 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 Baazar Style i.e., Baazar Style and V Mart go up and down completely randomly.

Pair Corralation between Baazar Style and V Mart

Assuming the 90 days trading horizon Baazar Style Retail is expected to under-perform the V Mart. In addition to that, Baazar Style is 1.11 times more volatile than V Mart Retail Limited. It trades about -0.07 of its total potential returns per unit of risk. V Mart Retail Limited is currently generating about 0.06 per unit of volatility. If you would invest  366,535  in V Mart Retail Limited on August 31, 2024 and sell it today you would earn a total of  30,360  from holding V Mart Retail Limited or generate 8.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.55%
Values	Daily Returns

Baazar Style Retail  vs.  V Mart Retail Limited

Baazar Style Retail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baazar Style Retail has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

V Mart Retail

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in V Mart Retail Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, V Mart may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Baazar Style and V Mart

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