Correlation Between Cantabil Retail and Sportking India

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

Diversification Opportunities for Cantabil Retail and Sportking India

0.73

Correlation Coefficient

Cantabil Retail  Sportking India

Poor diversification

The 3 months correlation between Cantabil and Sportking is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Cantabil Retail India and Sportking India Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sportking India 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 Sportking India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sportking India has no effect on the direction of Cantabil Retail i.e., Cantabil Retail and Sportking India go up and down completely randomly.

Pair Corralation between Cantabil Retail and Sportking India

Assuming the 90 days trading horizon Cantabil Retail is expected to generate 1.21 times less return on investment than Sportking India. But when comparing it to its historical volatility, Cantabil Retail India is 1.15 times less risky than Sportking India. It trades about 0.33 of its potential returns per unit of risk. Sportking India Limited is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  9,327  in Sportking India Limited on September 25, 2024 and sell it today you would earn a total of  2,022  from holding Sportking India Limited or generate 21.68% return on investment over 90 days.

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

Cantabil Retail India  vs.  Sportking India Limited

Cantabil Retail India

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cantabil Retail India are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent fundamental drivers, Cantabil Retail may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sportking India

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sportking India Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Sportking India is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Cantabil Retail and Sportking India

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

The idea behind Cantabil Retail India and Sportking India 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.

Check out your portfolio center.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.