Correlation Between Nucleus Software and Cambridge Technology

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

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

Diversification Opportunities for Nucleus Software and Cambridge Technology

0.15

Correlation Coefficient

Nucleus Software  Cambridge Technology

Average diversification

The 3 months correlation between Nucleus and Cambridge is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Nucleus Software Exports and Cambridge Technology Enterpris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambridge Technology and Nucleus Software 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 Nucleus Software Exports 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 Nucleus Software i.e., Nucleus Software and Cambridge Technology go up and down completely randomly.

Pair Corralation between Nucleus Software and Cambridge Technology

Assuming the 90 days trading horizon Nucleus Software is expected to generate 5.44 times less return on investment than Cambridge Technology. But when comparing it to its historical volatility, Nucleus Software Exports is 1.21 times less risky than Cambridge Technology. It trades about 0.01 of its potential returns per unit of risk. Cambridge Technology Enterprises is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  6,840  in Cambridge Technology Enterprises on October 3, 2024 and sell it today you would earn a total of  3,669  from holding Cambridge Technology Enterprises or generate 53.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.46%
Values	Daily Returns

Nucleus Software Exports  vs.  Cambridge Technology Enterpris

Nucleus Software Exports

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with Nucleus Software and Cambridge Technology

The main advantage of trading using opposite Nucleus Software and Cambridge Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nucleus Software 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 Nucleus Software Exports 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.