Correlation Between Punjab National and Cantabil Retail

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

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

Diversification Opportunities for Punjab National and Cantabil Retail

0.61

Correlation Coefficient

Punjab National  Cantabil Retail

Poor diversification

The 3 months correlation between Punjab and Cantabil is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Punjab National 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 Punjab National 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 Punjab National 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 Punjab National i.e., Punjab National and Cantabil Retail go up and down completely randomly.

Pair Corralation between Punjab National and Cantabil Retail

Assuming the 90 days trading horizon Punjab National Bank is expected to generate 1.76 times more return on investment than Cantabil Retail. However, Punjab National is 1.76 times more volatile than Cantabil Retail India. It trades about 0.1 of its potential returns per unit of risk. Cantabil Retail India is currently generating about -0.01 per unit of risk. If you would invest  10,098  in Punjab National Bank on September 2, 2024 and sell it today you would earn a total of  392.00  from holding Punjab National Bank or generate 3.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Punjab National Bank  vs.  Cantabil Retail India

Punjab National Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Punjab National Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Cantabil Retail India

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cantabil Retail India has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, Cantabil Retail is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Punjab National and Cantabil Retail

The main advantage of trading using opposite Punjab National and Cantabil Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Punjab National 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 Punjab National 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.