Correlation Between Centum Electronics and Pritish Nandy

Can any of the company-specific risk be diversified away by investing in both Centum Electronics and Pritish Nandy 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 Centum Electronics and Pritish Nandy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Centum Electronics Limited and Pritish Nandy Communications, you can compare the effects of market volatilities on Centum Electronics and Pritish Nandy 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 Centum Electronics with a short position of Pritish Nandy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centum Electronics and Pritish Nandy.

Diversification Opportunities for Centum Electronics and Pritish Nandy

-0.24

Correlation Coefficient

Centum Electronics  Pritish Nandy

Very good diversification

The 3 months correlation between Centum and Pritish is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Centum Electronics Limited and Pritish Nandy Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pritish Nandy Commun and Centum Electronics 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 Centum Electronics Limited are associated (or correlated) with Pritish Nandy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pritish Nandy Commun has no effect on the direction of Centum Electronics i.e., Centum Electronics and Pritish Nandy go up and down completely randomly.

Pair Corralation between Centum Electronics and Pritish Nandy

Assuming the 90 days trading horizon Centum Electronics Limited is expected to generate 1.32 times more return on investment than Pritish Nandy. However, Centum Electronics is 1.32 times more volatile than Pritish Nandy Communications. It trades about 0.04 of its potential returns per unit of risk. Pritish Nandy Communications is currently generating about -0.09 per unit of risk. If you would invest  166,940  in Centum Electronics Limited on October 25, 2024 and sell it today you would earn a total of  10,325  from holding Centum Electronics Limited or generate 6.18% return on investment over 90 days.

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

Centum Electronics Limited  vs.  Pritish Nandy Communications

Centum Electronics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Centum Electronics Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Centum Electronics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pritish Nandy Commun

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pritish Nandy Communications 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 technical and 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 Centum Electronics and Pritish Nandy

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

The idea behind Centum Electronics Limited and Pritish Nandy Communications 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.