Correlation Between Varun Beverages and Refex Industries
Can any of the company-specific risk be diversified away by investing in both Varun Beverages and Refex Industries 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 Varun Beverages and Refex Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Varun Beverages Limited and Refex Industries Limited, you can compare the effects of market volatilities on Varun Beverages and Refex Industries 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 Varun Beverages with a short position of Refex Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Varun Beverages and Refex Industries.
Diversification Opportunities for Varun Beverages and Refex Industries
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Varun and Refex is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Varun Beverages Limited and Refex Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Refex Industries and Varun Beverages 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 Varun Beverages Limited are associated (or correlated) with Refex Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Refex Industries has no effect on the direction of Varun Beverages i.e., Varun Beverages and Refex Industries go up and down completely randomly.
Pair Corralation between Varun Beverages and Refex Industries
Assuming the 90 days trading horizon Varun Beverages is expected to generate 1.28 times less return on investment than Refex Industries. In addition to that, Varun Beverages is 2.76 times more volatile than Refex Industries Limited. It trades about 0.05 of its total potential returns per unit of risk. Refex Industries Limited is currently generating about 0.18 per unit of volatility. If you would invest 11,392 in Refex Industries Limited on September 2, 2024 and sell it today you would earn a total of 40,498 from holding Refex Industries Limited or generate 355.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Varun Beverages Limited vs. Refex Industries Limited
Performance |
| Timeline |
| Varun Beverages |
| Refex Industries |
Varun Beverages and Refex Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Varun Beverages and Refex Industries
The main advantage of trading using opposite Varun Beverages and Refex Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Varun Beverages position performs unexpectedly, Refex Industries 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 Refex Industries will offset losses from the drop in Refex Industries' long position.| Varun Beverages vs. Kingfa Science Technology | Varun Beverages vs. Rico Auto Industries | Varun Beverages vs. GACM Technologies Limited | Varun Beverages vs. COSMO FIRST LIMITED |
| Refex Industries vs. Baazar Style Retail | Refex Industries vs. POWERGRID Infrastructure Investment | Refex Industries vs. V Mart Retail Limited | Refex Industries vs. SIL Investments Limited |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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