Correlation Between Cantabil Retail and Jayant Agro

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

Diversification Opportunities for Cantabil Retail and Jayant Agro

0.7

Correlation Coefficient

Cantabil Retail  Jayant Agro

Poor diversification

The 3 months correlation between Cantabil and Jayant is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Cantabil Retail India and Jayant Agro Organics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jayant Agro Organics 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 Jayant Agro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jayant Agro Organics has no effect on the direction of Cantabil Retail i.e., Cantabil Retail and Jayant Agro go up and down completely randomly.

Pair Corralation between Cantabil Retail and Jayant Agro

Assuming the 90 days trading horizon Cantabil Retail India is expected to generate 1.02 times more return on investment than Jayant Agro. However, Cantabil Retail is 1.02 times more volatile than Jayant Agro Organics. It trades about -0.03 of its potential returns per unit of risk. Jayant Agro Organics is currently generating about -0.04 per unit of risk. If you would invest  24,219  in Cantabil Retail India on September 4, 2024 and sell it today you would lose (1,324) from holding Cantabil Retail India or give up 5.47% 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.  Jayant Agro Organics

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

Jayant Agro Organics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jayant Agro Organics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Jayant Agro is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Cantabil Retail and Jayant Agro

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

The idea behind Cantabil Retail India and Jayant Agro Organics 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.