Correlation Between CCL Products and Cantabil Retail

Can any of the company-specific risk be diversified away by investing in both CCL Products and Cantabil Retail 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 CCL Products and Cantabil Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CCL Products Limited and Cantabil Retail India, you can compare the effects of market volatilities on CCL Products and Cantabil Retail 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 CCL Products with a short position of Cantabil Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of CCL Products and Cantabil Retail.

Diversification Opportunities for CCL Products and Cantabil Retail

-0.19

Correlation Coefficient

CCL Products  Cantabil Retail

Good diversification

The 3 months correlation between CCL and Cantabil is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding CCL Products Limited and Cantabil Retail India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cantabil Retail India and CCL Products 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 CCL Products Limited are associated (or correlated) with Cantabil Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cantabil Retail India has no effect on the direction of CCL Products i.e., CCL Products and Cantabil Retail go up and down completely randomly.

Pair Corralation between CCL Products and Cantabil Retail

Assuming the 90 days trading horizon CCL Products Limited is expected to under-perform the Cantabil Retail. But the stock apears to be less risky and, when comparing its historical volatility, CCL Products Limited is 1.28 times less risky than Cantabil Retail. The stock trades about -0.02 of its potential returns per unit of risk. The Cantabil Retail India is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  22,979  in Cantabil Retail India on October 26, 2024 and sell it today you would earn a total of  4,756  from holding Cantabil Retail India or generate 20.7% return on investment over 90 days.

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

CCL Products Limited  vs.  Cantabil Retail India

CCL Products Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CCL Products Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, CCL Products is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Cantabil Retail India

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cantabil Retail India are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting fundamental drivers, Cantabil Retail demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CCL Products and Cantabil Retail

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

The idea behind CCL Products Limited and Cantabil Retail India 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.