Correlation Between Cantabil Retail and Sarthak Metals

Can any of the company-specific risk be diversified away by investing in both Cantabil Retail and Sarthak Metals 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 Sarthak Metals 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 Sarthak Metals Limited, you can compare the effects of market volatilities on Cantabil Retail and Sarthak Metals 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 Sarthak Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cantabil Retail and Sarthak Metals.

Diversification Opportunities for Cantabil Retail and Sarthak Metals

0.18

Correlation Coefficient

Cantabil Retail  Sarthak Metals

Average diversification

The 3 months correlation between Cantabil and Sarthak is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Cantabil Retail India and Sarthak Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sarthak Metals 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 Sarthak Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sarthak Metals has no effect on the direction of Cantabil Retail i.e., Cantabil Retail and Sarthak Metals go up and down completely randomly.

Pair Corralation between Cantabil Retail and Sarthak Metals

Assuming the 90 days trading horizon Cantabil Retail India is expected to generate 0.68 times more return on investment than Sarthak Metals. However, Cantabil Retail India is 1.46 times less risky than Sarthak Metals. It trades about 0.06 of its potential returns per unit of risk. Sarthak Metals Limited is currently generating about -0.08 per unit of risk. If you would invest  24,777  in Cantabil Retail India on September 25, 2024 and sell it today you would earn a total of  1,975  from holding Cantabil Retail India or generate 7.97% 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.  Sarthak Metals Limited

Cantabil Retail India

Risk-Adjusted Performance

5 of 100

Modest

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 inconsistent fundamental drivers, Cantabil Retail may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sarthak Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sarthak Metals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Cantabil Retail and Sarthak Metals

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

The idea behind Cantabil Retail India and Sarthak Metals 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 Transaction History module to view history of all your transactions and understand their impact on performance.