Correlation Between Vodafone Idea and Cambridge Technology

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

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

Diversification Opportunities for Vodafone Idea and Cambridge Technology

0.36

Correlation Coefficient

Vodafone Idea  Cambridge Technology

Weak diversification

The 3 months correlation between Vodafone and Cambridge is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Vodafone Idea Limited and Cambridge Technology Enterpris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambridge Technology and Vodafone Idea 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 Vodafone Idea Limited are associated (or correlated) with Cambridge Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambridge Technology has no effect on the direction of Vodafone Idea i.e., Vodafone Idea and Cambridge Technology go up and down completely randomly.

Pair Corralation between Vodafone Idea and Cambridge Technology

Assuming the 90 days trading horizon Vodafone Idea Limited is expected to under-perform the Cambridge Technology. In addition to that, Vodafone Idea is 1.62 times more volatile than Cambridge Technology Enterprises. It trades about -0.19 of its total potential returns per unit of risk. Cambridge Technology Enterprises is currently generating about 0.07 per unit of volatility. If you would invest  9,599  in Cambridge Technology Enterprises on September 13, 2024 and sell it today you would earn a total of  902.00  from holding Cambridge Technology Enterprises or generate 9.4% return on investment over 90 days.

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

Vodafone Idea Limited  vs.  Cambridge Technology Enterpris

Vodafone Idea Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vodafone Idea Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Cambridge Technology

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cambridge Technology Enterprises are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Cambridge Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Vodafone Idea and Cambridge Technology

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

The idea behind Vodafone Idea Limited and Cambridge Technology Enterprises 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.