Correlation Between Cantabil Retail and Clean Science

Can any of the company-specific risk be diversified away by investing in both Cantabil Retail and Clean Science 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 Clean Science 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 Clean Science and, you can compare the effects of market volatilities on Cantabil Retail and Clean Science 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 Clean Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cantabil Retail and Clean Science.

Diversification Opportunities for Cantabil Retail and Clean Science

0.65

Correlation Coefficient

Cantabil Retail  Clean Science

Poor diversification

The 3 months correlation between Cantabil and Clean is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Cantabil Retail India and Clean Science and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Science 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 Clean Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Science has no effect on the direction of Cantabil Retail i.e., Cantabil Retail and Clean Science go up and down completely randomly.

Pair Corralation between Cantabil Retail and Clean Science

Assuming the 90 days trading horizon Cantabil Retail India is expected to generate 1.13 times more return on investment than Clean Science. However, Cantabil Retail is 1.13 times more volatile than Clean Science and. It trades about -0.05 of its potential returns per unit of risk. Clean Science and is currently generating about -0.11 per unit of risk. If you would invest  24,729  in Cantabil Retail India on September 2, 2024 and sell it today you would lose (1,794) from holding Cantabil Retail India or give up 7.25% 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.  Clean Science and

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.

Clean Science

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clean Science and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Cantabil Retail and Clean Science

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

The idea behind Cantabil Retail India and Clean Science and 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.