Correlation Between Centum Electronics and Sintex Plastics

Can any of the company-specific risk be diversified away by investing in both Centum Electronics and Sintex Plastics 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 Centum Electronics and Sintex Plastics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Centum Electronics Limited and Sintex Plastics Technology, you can compare the effects of market volatilities on Centum Electronics and Sintex Plastics 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 Centum Electronics with a short position of Sintex Plastics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centum Electronics and Sintex Plastics.

Diversification Opportunities for Centum Electronics and Sintex Plastics

0.0

Correlation Coefficient

Centum Electronics  Sintex Plastics

Pay attention - limited upside

The 3 months correlation between Centum and Sintex is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Centum Electronics Limited and Sintex Plastics Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sintex Plastics Tech and Centum Electronics 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 Centum Electronics Limited are associated (or correlated) with Sintex Plastics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sintex Plastics Tech has no effect on the direction of Centum Electronics i.e., Centum Electronics and Sintex Plastics go up and down completely randomly.

Pair Corralation between Centum Electronics and Sintex Plastics

If you would invest  182,285  in Centum Electronics Limited on September 29, 2024 and sell it today you would earn a total of  31,345  from holding Centum Electronics Limited or generate 17.2% return on investment over 90 days.

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

Centum Electronics Limited  vs.  Sintex Plastics Technology

Centum Electronics

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Centum Electronics Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Centum Electronics sustained solid returns over the last few months and may actually be approaching a breakup point.

Sintex Plastics Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sintex Plastics Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Sintex Plastics is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Centum Electronics and Sintex Plastics

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

The idea behind Centum Electronics Limited and Sintex Plastics Technology 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.