Correlation Between Cantabil Retail and Vodafone Idea

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

Diversification Opportunities for Cantabil Retail and Vodafone Idea

0.49

Correlation Coefficient

Cantabil Retail  Vodafone Idea

Very weak diversification

The 3 months correlation between Cantabil and Vodafone is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Cantabil Retail India and Vodafone Idea Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vodafone Idea 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 Vodafone Idea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vodafone Idea Limited has no effect on the direction of Cantabil Retail i.e., Cantabil Retail and Vodafone Idea go up and down completely randomly.

Pair Corralation between Cantabil Retail and Vodafone Idea

Assuming the 90 days trading horizon Cantabil Retail India is expected to generate 1.25 times more return on investment than Vodafone Idea. However, Cantabil Retail is 1.25 times more volatile than Vodafone Idea Limited. It trades about 0.04 of its potential returns per unit of risk. Vodafone Idea Limited is currently generating about -0.04 per unit of risk. If you would invest  22,851  in Cantabil Retail India on December 2, 2024 and sell it today you would earn a total of  1,384  from holding Cantabil Retail India or generate 6.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Cantabil Retail India  vs.  Vodafone Idea Limited

Cantabil Retail India

Risk-Adjusted Performance

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 abnormal fundamental drivers, Cantabil Retail may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Vodafone Idea Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vodafone Idea Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Cantabil Retail and Vodafone Idea

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

The idea behind Cantabil Retail India and Vodafone Idea 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.