Correlation Between Blue Coast and Cantabil Retail

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

By analyzing existing cross correlation between Blue Coast Hotels and Cantabil Retail India, you can compare the effects of market volatilities on Blue Coast and Cantabil 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 Blue Coast with a short position of Cantabil Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Coast and Cantabil Retail.

Diversification Opportunities for Blue Coast and Cantabil Retail

0.45

Correlation Coefficient

Blue Coast  Cantabil Retail

Very weak diversification

The 3 months correlation between Blue and Cantabil is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Blue Coast Hotels and Cantabil Retail India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cantabil Retail India and Blue Coast 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 Blue Coast Hotels are associated (or correlated) with Cantabil Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cantabil Retail India has no effect on the direction of Blue Coast i.e., Blue Coast and Cantabil Retail go up and down completely randomly.

Pair Corralation between Blue Coast and Cantabil Retail

Assuming the 90 days trading horizon Blue Coast Hotels is expected to generate 0.8 times more return on investment than Cantabil Retail. However, Blue Coast Hotels is 1.24 times less risky than Cantabil Retail. It trades about 0.15 of its potential returns per unit of risk. Cantabil Retail India is currently generating about 0.06 per unit of risk. If you would invest  1,052  in Blue Coast Hotels on September 24, 2024 and sell it today you would earn a total of  180.00  from holding Blue Coast Hotels or generate 17.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

Blue Coast Hotels  vs.  Cantabil Retail India

Blue Coast Hotels

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Coast Hotels are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Blue Coast sustained solid returns over the last few months and may actually be approaching a breakup point.

Cantabil Retail India

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cantabil Retail India are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental drivers, Cantabil Retail may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Blue Coast and Cantabil Retail

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

The idea behind Blue Coast Hotels and Cantabil Retail India 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.