Correlation Between Cambridge Technology and Kaynes Technology

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

By analyzing existing cross correlation between Cambridge Technology Enterprises and Kaynes Technology India, you can compare the effects of market volatilities on Cambridge Technology and Kaynes Technology 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 Cambridge Technology with a short position of Kaynes Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambridge Technology and Kaynes Technology.

Diversification Opportunities for Cambridge Technology and Kaynes Technology

0.35

Correlation Coefficient

Cambridge Technology  Kaynes Technology

Weak diversification

The 3 months correlation between Cambridge and Kaynes is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Cambridge Technology Enterpris and Kaynes Technology India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaynes Technology India and Cambridge Technology 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 Cambridge Technology Enterprises are associated (or correlated) with Kaynes Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaynes Technology India has no effect on the direction of Cambridge Technology i.e., Cambridge Technology and Kaynes Technology go up and down completely randomly.

Pair Corralation between Cambridge Technology and Kaynes Technology

Assuming the 90 days trading horizon Cambridge Technology is expected to generate 2.47 times less return on investment than Kaynes Technology. In addition to that, Cambridge Technology is 1.25 times more volatile than Kaynes Technology India. It trades about 0.05 of its total potential returns per unit of risk. Kaynes Technology India is currently generating about 0.15 per unit of volatility. If you would invest  166,230  in Kaynes Technology India on October 3, 2024 and sell it today you would earn a total of  575,500  from holding Kaynes Technology India or generate 346.21% return on investment over 90 days.

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

Cambridge Technology Enterpris  vs.  Kaynes Technology India

Cambridge Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Kaynes Technology India

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kaynes Technology India are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Kaynes Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cambridge Technology and Kaynes Technology

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

The idea behind Cambridge Technology Enterprises and Kaynes Technology 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.