Correlation Between Indian Overseas and Cantabil Retail

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

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

Diversification Opportunities for Indian Overseas and Cantabil Retail

0.76

Correlation Coefficient

Indian Overseas  Cantabil Retail

Poor diversification

The 3 months correlation between Indian and Cantabil is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Indian Overseas Bank 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 Indian Overseas 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 Indian Overseas Bank 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 Indian Overseas i.e., Indian Overseas and Cantabil Retail go up and down completely randomly.

Pair Corralation between Indian Overseas and Cantabil Retail

Assuming the 90 days trading horizon Indian Overseas is expected to generate 7.63 times less return on investment than Cantabil Retail. In addition to that, Indian Overseas is 1.19 times more volatile than Cantabil Retail India. It trades about 0.0 of its total potential returns per unit of risk. Cantabil Retail India is currently generating about 0.04 per unit of volatility. If you would invest  23,490  in Cantabil Retail India on September 12, 2024 and sell it today you would earn a total of  1,039  from holding Cantabil Retail India or generate 4.42% return on investment over 90 days.

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

Indian Overseas Bank  vs.  Cantabil Retail India

Indian Overseas Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indian Overseas Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Indian Overseas is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Cantabil Retail India

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cantabil Retail India are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, Cantabil Retail is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Indian Overseas and Cantabil Retail

The main advantage of trading using opposite Indian Overseas and Cantabil Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indian Overseas 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 Indian Overseas Bank 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.