Correlation Between Cambridge Technology and Sanginita Chemicals

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

Diversification Opportunities for Cambridge Technology and Sanginita Chemicals

0.34

Correlation Coefficient

Cambridge Technology  Sanginita Chemicals

Weak diversification

The 3 months correlation between Cambridge and Sanginita is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Cambridge Technology Enterpris and Sanginita Chemicals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanginita Chemicals 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 Sanginita Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanginita Chemicals has no effect on the direction of Cambridge Technology i.e., Cambridge Technology and Sanginita Chemicals go up and down completely randomly.

Pair Corralation between Cambridge Technology and Sanginita Chemicals

Assuming the 90 days trading horizon Cambridge Technology Enterprises is expected to generate 1.0 times more return on investment than Sanginita Chemicals. However, Cambridge Technology is 1.0 times more volatile than Sanginita Chemicals Limited. It trades about 0.05 of its potential returns per unit of risk. Sanginita Chemicals Limited is currently generating about -0.01 per unit of risk. If you would invest  5,630  in Cambridge Technology Enterprises on September 23, 2024 and sell it today you would earn a total of  4,880  from holding Cambridge Technology Enterprises or generate 86.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Cambridge Technology Enterpris  vs.  Sanginita Chemicals Limited

Cambridge Technology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cambridge Technology Enterprises are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Cambridge Technology is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Sanginita Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sanginita Chemicals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Sanginita Chemicals is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Cambridge Technology and Sanginita Chemicals

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

The idea behind Cambridge Technology Enterprises and Sanginita Chemicals 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.