Correlation Between Refex Industries and MIC Electronics
Can any of the company-specific risk be diversified away by investing in both Refex Industries and MIC Electronics 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 MIC Electronics 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 MIC Electronics Limited, you can compare the effects of market volatilities on Refex Industries and MIC Electronics 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 MIC Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Refex Industries and MIC Electronics.
Diversification Opportunities for Refex Industries and MIC Electronics
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Refex and MIC is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Refex Industries Limited and MIC Electronics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MIC Electronics 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 MIC Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MIC Electronics has no effect on the direction of Refex Industries i.e., Refex Industries and MIC Electronics go up and down completely randomly.
Pair Corralation between Refex Industries and MIC Electronics
Assuming the 90 days trading horizon Refex Industries Limited is expected to generate 1.09 times more return on investment than MIC Electronics. However, Refex Industries is 1.09 times more volatile than MIC Electronics Limited. It trades about 0.14 of its potential returns per unit of risk. MIC Electronics Limited is currently generating about 0.12 per unit of risk. If you would invest 4,706 in Refex Industries Limited on December 8, 2024 and sell it today you would earn a total of 37,689 from holding Refex Industries Limited or generate 800.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.66% |
| Values | Daily Returns |
Refex Industries Limited vs. MIC Electronics Limited
Performance |
| Timeline |
| Refex Industries |
| MIC Electronics |
Refex Industries and MIC Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Refex Industries and MIC Electronics
The main advantage of trading using opposite Refex Industries and MIC Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Refex Industries position performs unexpectedly, MIC Electronics 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 MIC Electronics will offset losses from the drop in MIC Electronics' long position.| Refex Industries vs. Indian Card Clothing | ||
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Check out your portfolio center.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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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