Correlation Between Cantabil Retail and Aarey Drugs

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

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

Diversification Opportunities for Cantabil Retail and Aarey Drugs

0.04

Correlation Coefficient

Cantabil Retail  Aarey Drugs

Significant diversification

The 3 months correlation between Cantabil and Aarey is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Cantabil Retail India and Aarey Drugs Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aarey Drugs Pharmace and Cantabil 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 Cantabil Retail India are associated (or correlated) with Aarey Drugs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aarey Drugs Pharmace has no effect on the direction of Cantabil Retail i.e., Cantabil Retail and Aarey Drugs go up and down completely randomly.

Pair Corralation between Cantabil Retail and Aarey Drugs

Assuming the 90 days trading horizon Cantabil Retail India is expected to generate 1.06 times more return on investment than Aarey Drugs. However, Cantabil Retail is 1.06 times more volatile than Aarey Drugs Pharmaceuticals. It trades about 0.1 of its potential returns per unit of risk. Aarey Drugs Pharmaceuticals is currently generating about -0.16 per unit of risk. If you would invest  24,520  in Cantabil Retail India on September 30, 2024 and sell it today you would earn a total of  3,692  from holding Cantabil Retail India or generate 15.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Cantabil Retail India  vs.  Aarey Drugs Pharmaceuticals

Cantabil Retail India

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cantabil Retail India are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting fundamental drivers, Cantabil Retail demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Aarey Drugs Pharmace

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aarey Drugs Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Cantabil Retail and Aarey Drugs

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

The idea behind Cantabil Retail India and Aarey Drugs Pharmaceuticals 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.