Correlation Between Spentex Industries and VA Tech

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

Diversification Opportunities for Spentex Industries and VA Tech

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Spentex and WABAG is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Spentex Industries Limited and VA Tech Wabag in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VA Tech Wabag and Spentex 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 Spentex Industries Limited are associated (or correlated) with VA Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VA Tech Wabag has no effect on the direction of Spentex Industries i.e., Spentex Industries and VA Tech go up and down completely randomly.

Pair Corralation between Spentex Industries and VA Tech

If you would invest  179,730  in VA Tech Wabag on September 12, 2024 and sell it today you would earn a total of  3,815  from holding VA Tech Wabag or generate 2.12% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Spentex Industries Limited  vs.  VA Tech Wabag

 Performance 
       Timeline  
Spentex Industries 

Risk-Adjusted Performance

0 of 100

 
Weak
 
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Very Weak
Over the last 90 days Spentex Industries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Spentex Industries is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
VA Tech Wabag 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in VA Tech Wabag are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental drivers, VA Tech displayed solid returns over the last few months and may actually be approaching a breakup point.

Spentex Industries and VA Tech Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Spentex Industries and VA Tech

The main advantage of trading using opposite Spentex Industries and VA Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spentex Industries position performs unexpectedly, VA Tech 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 VA Tech will offset losses from the drop in VA Tech's long position.
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The idea behind Spentex Industries Limited and VA Tech Wabag 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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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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