Correlation Between Refex Industries and Total Transport
Can any of the company-specific risk be diversified away by investing in both Refex Industries and Total Transport 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 Total Transport 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 Total Transport Systems, you can compare the effects of market volatilities on Refex Industries and Total Transport 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 Total Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Refex Industries and Total Transport.
Diversification Opportunities for Refex Industries and Total Transport
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Refex and Total is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Refex Industries Limited and Total Transport Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Transport Systems 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 Total Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Transport Systems has no effect on the direction of Refex Industries i.e., Refex Industries and Total Transport go up and down completely randomly.
Pair Corralation between Refex Industries and Total Transport
Assuming the 90 days trading horizon Refex Industries Limited is expected to generate 1.07 times more return on investment than Total Transport. However, Refex Industries is 1.07 times more volatile than Total Transport Systems. It trades about 0.17 of its potential returns per unit of risk. Total Transport Systems is currently generating about -0.22 per unit of risk. If you would invest 47,985 in Refex Industries Limited on September 3, 2024 and sell it today you would earn a total of 3,905 from holding Refex Industries Limited or generate 8.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Refex Industries Limited vs. Total Transport Systems
Performance |
| Timeline |
| Refex Industries |
| Total Transport Systems |
Refex Industries and Total Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Refex Industries and Total Transport
The main advantage of trading using opposite Refex Industries and Total Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Refex Industries position performs unexpectedly, Total Transport 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 Total Transport will offset losses from the drop in Total Transport's long position.| Refex Industries vs. Melstar Information Technologies | Refex Industries vs. Datamatics Global Services | Refex Industries vs. Speciality Restaurants Limited | Refex Industries vs. Nucleus Software Exports |
| Total Transport vs. Tata Consultancy Services | Total Transport vs. Reliance Industries Limited | Total Transport vs. Wipro Limited | Total Transport vs. Shipping |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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