Correlation Between Sandhar Technologies and California Software

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

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

Diversification Opportunities for Sandhar Technologies and California Software

0.38

Correlation Coefficient

Sandhar Technologies  California Software

Weak diversification

The 3 months correlation between Sandhar and California is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Sandhar Technologies Limited and California Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Software and Sandhar Technologies 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 Sandhar Technologies Limited are associated (or correlated) with California Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Software has no effect on the direction of Sandhar Technologies i.e., Sandhar Technologies and California Software go up and down completely randomly.

Pair Corralation between Sandhar Technologies and California Software

Assuming the 90 days trading horizon Sandhar Technologies Limited is expected to generate 0.85 times more return on investment than California Software. However, Sandhar Technologies Limited is 1.18 times less risky than California Software. It trades about 0.05 of its potential returns per unit of risk. California Software is currently generating about 0.03 per unit of risk. If you would invest  35,632  in Sandhar Technologies Limited on September 30, 2024 and sell it today you would earn a total of  16,043  from holding Sandhar Technologies Limited or generate 45.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.45%
Values	Daily Returns

Sandhar Technologies Limited  vs.  California Software

Sandhar Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sandhar Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical indicators, Sandhar Technologies is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

California Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days California Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady 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 Sandhar Technologies and California Software

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

The idea behind Sandhar Technologies Limited and California Software 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.