Correlation Between Dharani SugarsChemicals and Cigniti Technologies

Can any of the company-specific risk be diversified away by investing in both Dharani SugarsChemicals and Cigniti Technologies 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 Dharani SugarsChemicals and Cigniti Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Dharani SugarsChemicals and Cigniti Technologies

0.0

Correlation Coefficient

Dharani SugarsChemicals  Cigniti Technologies

Pay attention - limited upside

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

Pair Corralation between Dharani SugarsChemicals and Cigniti Technologies

If you would invest  139,090  in Cigniti Technologies Limited on September 12, 2024 and sell it today you would earn a total of  46,605  from holding Cigniti Technologies Limited or generate 33.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Dharani SugarsChemicals Limite  vs.  Cigniti Technologies Limited

Dharani SugarsChemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dharani SugarsChemicals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Dharani SugarsChemicals is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Cigniti Technologies

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cigniti Technologies Limited are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Cigniti Technologies demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dharani SugarsChemicals and Cigniti Technologies

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

The idea behind Dharani SugarsChemicals Limited and Cigniti Technologies 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.