Correlation Between Cantabil Retail and ZF Commercial

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

Diversification Opportunities for Cantabil Retail and ZF Commercial

-0.65

Correlation Coefficient

Cantabil Retail  ZF Commercial

Excellent diversification

The 3 months correlation between Cantabil and ZFCVINDIA is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Cantabil Retail India and ZF Commercial Vehicle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZF Commercial Vehicle 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 ZF Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZF Commercial Vehicle has no effect on the direction of Cantabil Retail i.e., Cantabil Retail and ZF Commercial go up and down completely randomly.

Pair Corralation between Cantabil Retail and ZF Commercial

Assuming the 90 days trading horizon Cantabil Retail India is expected to generate 8.52 times more return on investment than ZF Commercial. However, Cantabil Retail is 8.52 times more volatile than ZF Commercial Vehicle. It trades about 0.04 of its potential returns per unit of risk. ZF Commercial Vehicle is currently generating about 0.03 per unit of risk. If you would invest  25,910  in Cantabil Retail India on October 7, 2024 and sell it today you would earn a total of  3,730  from holding Cantabil Retail India or generate 14.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.39%
Values	Daily Returns

Cantabil Retail India  vs.  ZF Commercial Vehicle

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.

ZF Commercial Vehicle

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZF Commercial Vehicle has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Cantabil Retail and ZF Commercial

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

The idea behind Cantabil Retail India and ZF Commercial Vehicle 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..