Correlation Between Spencers Retail and Deepak Fertilizers

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

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

Diversification Opportunities for Spencers Retail and Deepak Fertilizers

-0.42

Correlation Coefficient

Spencers Retail  Deepak Fertilizers

Very good diversification

The 3 months correlation between Spencers and Deepak is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Spencers Retail Limited and Deepak Fertilizers and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deepak Fertilizers and and Spencers Retail 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 Spencers Retail Limited are associated (or correlated) with Deepak Fertilizers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deepak Fertilizers and has no effect on the direction of Spencers Retail i.e., Spencers Retail and Deepak Fertilizers go up and down completely randomly.

Pair Corralation between Spencers Retail and Deepak Fertilizers

Assuming the 90 days trading horizon Spencers Retail Limited is expected to under-perform the Deepak Fertilizers. But the stock apears to be less risky and, when comparing its historical volatility, Spencers Retail Limited is 1.08 times less risky than Deepak Fertilizers. The stock trades about -0.08 of its potential returns per unit of risk. The Deepak Fertilizers and is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  131,770  in Deepak Fertilizers and on April 24, 2025 and sell it today you would earn a total of  27,960  from holding Deepak Fertilizers and or generate 21.22% return on investment over 90 days.

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

Spencers Retail Limited  vs.  Deepak Fertilizers and

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 weak 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.

Deepak Fertilizers and

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Deepak Fertilizers and are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Deepak Fertilizers reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Spencers Retail and Deepak Fertilizers

The main advantage of trading using opposite Spencers Retail and Deepak Fertilizers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spencers Retail position performs unexpectedly, Deepak Fertilizers 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 Deepak Fertilizers will offset losses from the drop in Deepak Fertilizers' long position.

The idea behind Spencers Retail Limited and Deepak Fertilizers and 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.