Correlation Between Cantabil Retail and Steel Authority

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

Diversification Opportunities for Cantabil Retail and Steel Authority

0.05

Correlation Coefficient

Cantabil Retail  Steel Authority

Significant diversification

The 3 months correlation between Cantabil and Steel is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Cantabil Retail India and Steel Authority of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Authority 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 Steel Authority. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Authority has no effect on the direction of Cantabil Retail i.e., Cantabil Retail and Steel Authority go up and down completely randomly.

Pair Corralation between Cantabil Retail and Steel Authority

Assuming the 90 days trading horizon Cantabil Retail India is expected to generate 1.29 times more return on investment than Steel Authority. However, Cantabil Retail is 1.29 times more volatile than Steel Authority of. It trades about 0.28 of its potential returns per unit of risk. Steel Authority of is currently generating about -0.1 per unit of risk. If you would invest  22,996  in Cantabil Retail India on October 7, 2024 and sell it today you would earn a total of  6,644  from holding Cantabil Retail India or generate 28.89% return on investment over 90 days.

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

Cantabil Retail India  vs.  Steel Authority of

Cantabil Retail India

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cantabil Retail India are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental drivers, Cantabil Retail demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Steel Authority

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Steel Authority of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Cantabil Retail and Steel Authority

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

The idea behind Cantabil Retail India and Steel Authority of 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.