Correlation Between Cambridge Technology and Sunflag Iron

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

Diversification Opportunities for Cambridge Technology and Sunflag Iron

0.77

Correlation Coefficient

Cambridge Technology  Sunflag Iron

Poor diversification

The 3 months correlation between Cambridge and Sunflag is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Cambridge Technology Enterpris and Sunflag Iron And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunflag Iron And 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 Sunflag Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunflag Iron And has no effect on the direction of Cambridge Technology i.e., Cambridge Technology and Sunflag Iron go up and down completely randomly.

Pair Corralation between Cambridge Technology and Sunflag Iron

Assuming the 90 days trading horizon Cambridge Technology Enterprises is expected to under-perform the Sunflag Iron. But the stock apears to be less risky and, when comparing its historical volatility, Cambridge Technology Enterprises is 1.51 times less risky than Sunflag Iron. The stock trades about 0.0 of its potential returns per unit of risk. The Sunflag Iron And is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  22,137  in Sunflag Iron And on October 11, 2024 and sell it today you would earn a total of  7,938  from holding Sunflag Iron And or generate 35.86% return on investment over 90 days.

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

Cambridge Technology Enterpris  vs.  Sunflag Iron And

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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Sunflag Iron And

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sunflag Iron And are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Sunflag Iron reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cambridge Technology and Sunflag Iron

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

The idea behind Cambridge Technology Enterprises and Sunflag Iron And 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..