Correlation Between JGCHEMICALS and Spencers Retail

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Can any of the company-specific risk be diversified away by investing in both JGCHEMICALS 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 JGCHEMICALS and Spencers Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JGCHEMICALS LIMITED and Spencers Retail Limited, you can compare the effects of market volatilities on JGCHEMICALS 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 JGCHEMICALS with a short position of Spencers Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of JGCHEMICALS and Spencers Retail.

Diversification Opportunities for JGCHEMICALS and Spencers Retail

-0.14
  Correlation Coefficient

Good diversification

The 3 months correlation between JGCHEMICALS and Spencers is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding JGCHEMICALS 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 JGCHEMICALS 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 JGCHEMICALS 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 JGCHEMICALS i.e., JGCHEMICALS and Spencers Retail go up and down completely randomly.

Pair Corralation between JGCHEMICALS and Spencers Retail

Assuming the 90 days trading horizon JGCHEMICALS LIMITED is expected to generate 1.41 times more return on investment than Spencers Retail. However, JGCHEMICALS is 1.41 times more volatile than Spencers Retail Limited. It trades about 0.14 of its potential returns per unit of risk. Spencers Retail Limited is currently generating about 0.03 per unit of risk. If you would invest  23,908  in JGCHEMICALS LIMITED on September 21, 2024 and sell it today you would earn a total of  18,352  from holding JGCHEMICALS LIMITED or generate 76.76% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

JGCHEMICALS LIMITED  vs.  Spencers Retail Limited

 Performance 
       Timeline  
JGCHEMICALS LIMITED 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in JGCHEMICALS LIMITED are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical indicators, JGCHEMICALS may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Spencers Retail 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 uncertain 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.

JGCHEMICALS and Spencers Retail Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JGCHEMICALS and Spencers Retail

The main advantage of trading using opposite JGCHEMICALS and Spencers Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JGCHEMICALS 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.
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The idea behind JGCHEMICALS 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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