Correlation Between Cantabil Retail and Hindustan Copper

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

Diversification Opportunities for Cantabil Retail and Hindustan Copper

0.52

Correlation Coefficient

Cantabil Retail  Hindustan Copper

Very weak diversification

The 3 months correlation between Cantabil and Hindustan is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Cantabil Retail India and Hindustan Copper Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hindustan Copper 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 Hindustan Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hindustan Copper has no effect on the direction of Cantabil Retail i.e., Cantabil Retail and Hindustan Copper go up and down completely randomly.

Pair Corralation between Cantabil Retail and Hindustan Copper

Assuming the 90 days trading horizon Cantabil Retail India is expected to generate 1.28 times more return on investment than Hindustan Copper. However, Cantabil Retail is 1.28 times more volatile than Hindustan Copper Limited. It trades about -0.01 of its potential returns per unit of risk. Hindustan Copper Limited is currently generating about -0.05 per unit of risk. If you would invest  28,783  in Cantabil Retail India on December 30, 2024 and sell it today you would lose (1,872) from holding Cantabil Retail India or give up 6.5% of portfolio value over 90 days.

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

Cantabil Retail India  vs.  Hindustan Copper Limited

Cantabil Retail India

Risk-Adjusted Performance

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 newest stock price confusion, may contribute to short-horizon losses for the traders.

Hindustan Copper

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hindustan Copper Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Cantabil Retail and Hindustan Copper

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

The idea behind Cantabil Retail India and Hindustan Copper 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.