Correlation Between Cantabil Retail and Motilal Oswal

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

Diversification Opportunities for Cantabil Retail and Motilal Oswal

-0.6

Correlation Coefficient

Cantabil Retail  Motilal Oswal

Excellent diversification

The 3 months correlation between Cantabil and Motilal is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Cantabil Retail India and Motilal Oswal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Motilal Oswal Financial 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 Motilal Oswal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Motilal Oswal Financial has no effect on the direction of Cantabil Retail i.e., Cantabil Retail and Motilal Oswal go up and down completely randomly.

Pair Corralation between Cantabil Retail and Motilal Oswal

Assuming the 90 days trading horizon Cantabil Retail India is expected to under-perform the Motilal Oswal. But the stock apears to be less risky and, when comparing its historical volatility, Cantabil Retail India is 1.62 times less risky than Motilal Oswal. The stock trades about -0.05 of its potential returns per unit of risk. The Motilal Oswal Financial is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  75,085  in Motilal Oswal Financial on September 2, 2024 and sell it today you would earn a total of  16,840  from holding Motilal Oswal Financial or generate 22.43% return on investment over 90 days.

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

Cantabil Retail India  vs.  Motilal Oswal Financial

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.

Motilal Oswal Financial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Motilal Oswal Financial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Motilal Oswal disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cantabil Retail and Motilal Oswal

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

The idea behind Cantabil Retail India and Motilal Oswal Financial 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.