Correlation Between California Software and Sintex Plastics

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

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

Diversification Opportunities for California Software and Sintex Plastics

0.0

Correlation Coefficient

California Software  Sintex Plastics

Pay attention - limited upside

The 3 months correlation between California and Sintex is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding California Software 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 California Software 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 California Software 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 California Software i.e., California Software and Sintex Plastics go up and down completely randomly.

Pair Corralation between California Software and Sintex Plastics

Assuming the 90 days trading horizon California Software is expected to generate 1.52 times more return on investment than Sintex Plastics. However, California Software is 1.52 times more volatile than Sintex Plastics Technology. It trades about 0.01 of its potential returns per unit of risk. Sintex Plastics Technology is currently generating about -0.01 per unit of risk. If you would invest  1,840  in California Software on September 4, 2024 and sell it today you would lose (21.00) from holding California Software or give up 1.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.59%
Values	Daily Returns

California Software  vs.  Sintex Plastics Technology

California Software

Risk-Adjusted Performance

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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.

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 California Software and Sintex Plastics

The main advantage of trading using opposite California Software and Sintex Plastics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Software 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 California Software 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.