Correlation Between Cantabil Retail and Aban Offshore

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

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

Diversification Opportunities for Cantabil Retail and Aban Offshore

0.75

Correlation Coefficient

Cantabil Retail  Aban Offshore

Poor diversification

The 3 months correlation between Cantabil and Aban is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Cantabil Retail India and Aban Offshore Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aban Offshore Limited and Cantabil Retail 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 Cantabil Retail India are associated (or correlated) with Aban Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aban Offshore Limited has no effect on the direction of Cantabil Retail i.e., Cantabil Retail and Aban Offshore go up and down completely randomly.

Pair Corralation between Cantabil Retail and Aban Offshore

Assuming the 90 days trading horizon Cantabil Retail India is expected to generate 0.89 times more return on investment than Aban Offshore. However, Cantabil Retail India is 1.13 times less risky than Aban Offshore. It trades about -0.05 of its potential returns per unit of risk. Aban Offshore Limited is currently generating about -0.14 per unit of risk. If you would invest  24,729  in Cantabil Retail India on August 31, 2024 and sell it today you would lose (1,937) from holding Cantabil Retail India or give up 7.83% of portfolio value over 90 days.

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

Cantabil Retail India  vs.  Aban Offshore Limited

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 latest weak performance, the Stock's fundamental drivers remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Aban Offshore Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aban Offshore Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Cantabil Retail and Aban Offshore

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

The idea behind Cantabil Retail India and Aban Offshore 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.