Correlation Between Data Patterns and Spencers Retail

Can any of the company-specific risk be diversified away by investing in both Data Patterns 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 Data Patterns and Spencers Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Data Patterns Limited and Spencers Retail Limited, you can compare the effects of market volatilities on Data Patterns 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 Data Patterns with a short position of Spencers Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Data Patterns and Spencers Retail.

Diversification Opportunities for Data Patterns and Spencers Retail

-0.46

Correlation Coefficient

Data Patterns  Spencers Retail

Very good diversification

The 3 months correlation between Data and Spencers is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Data Patterns 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 Data Patterns 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 Data Patterns 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 Data Patterns i.e., Data Patterns and Spencers Retail go up and down completely randomly.

Pair Corralation between Data Patterns and Spencers Retail

Assuming the 90 days trading horizon Data Patterns Limited is expected to generate 1.75 times more return on investment than Spencers Retail. However, Data Patterns is 1.75 times more volatile than Spencers Retail Limited. It trades about 0.13 of its potential returns per unit of risk. Spencers Retail Limited is currently generating about -0.09 per unit of risk. If you would invest  217,140  in Data Patterns Limited on April 23, 2025 and sell it today you would earn a total of  63,670  from holding Data Patterns Limited or generate 29.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Data Patterns Limited  vs.  Spencers Retail Limited

Data Patterns Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Data Patterns Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Data Patterns unveiled solid returns over the last few months and may actually be approaching a breakup point.

Spencers Retail

Risk-Adjusted Performance

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 latest uncertain performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Data Patterns and Spencers Retail

The main advantage of trading using opposite Data Patterns and Spencers Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Data Patterns 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.

The idea behind Data Patterns 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.