Correlation Between Cantabil Retail and Coffee Day

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

Diversification Opportunities for Cantabil Retail and Coffee Day

-0.22

Correlation Coefficient

Cantabil Retail  Coffee Day

Very good diversification

The 3 months correlation between Cantabil and Coffee is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Cantabil Retail India and Coffee Day Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coffee Day Enterprises 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 Coffee Day. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coffee Day Enterprises has no effect on the direction of Cantabil Retail i.e., Cantabil Retail and Coffee Day go up and down completely randomly.

Pair Corralation between Cantabil Retail and Coffee Day

Assuming the 90 days trading horizon Cantabil Retail India is expected to generate 1.19 times more return on investment than Coffee Day. However, Cantabil Retail is 1.19 times more volatile than Coffee Day Enterprises. It trades about 0.28 of its potential returns per unit of risk. Coffee Day Enterprises is currently generating about -0.47 per unit of risk. If you would invest  22,838  in Cantabil Retail India on September 23, 2024 and sell it today you would earn a total of  3,414  from holding Cantabil Retail India or generate 14.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Cantabil Retail India  vs.  Coffee Day Enterprises

Cantabil Retail India

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cantabil Retail India are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady fundamental drivers, Cantabil Retail may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Coffee Day Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coffee Day Enterprises 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 fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Cantabil Retail and Coffee Day

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

The idea behind Cantabil Retail India and Coffee Day Enterprises 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.