Correlation Between Som Distilleries and Cambridge Technology

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

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

Diversification Opportunities for Som Distilleries and Cambridge Technology

0.75

Correlation Coefficient

Som Distilleries  Cambridge Technology

Poor diversification

The 3 months correlation between Som and Cambridge is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Som Distilleries Breweries and Cambridge Technology Enterpris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambridge Technology and Som Distilleries 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 Som Distilleries Breweries 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 Som Distilleries i.e., Som Distilleries and Cambridge Technology go up and down completely randomly.

Pair Corralation between Som Distilleries and Cambridge Technology

Assuming the 90 days trading horizon Som Distilleries Breweries is expected to generate 13.09 times more return on investment than Cambridge Technology. However, Som Distilleries is 13.09 times more volatile than Cambridge Technology Enterprises. It trades about 0.05 of its potential returns per unit of risk. Cambridge Technology Enterprises is currently generating about 0.05 per unit of risk. If you would invest  4,694  in Som Distilleries Breweries on September 28, 2024 and sell it today you would earn a total of  5,832  from holding Som Distilleries Breweries or generate 124.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.79%
Values	Daily Returns

Som Distilleries Breweries  vs.  Cambridge Technology Enterpris

Som Distilleries Bre

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Som Distilleries Breweries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains 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 latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Som Distilleries and Cambridge Technology

The main advantage of trading using opposite Som Distilleries and Cambridge Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Som Distilleries 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 Som Distilleries Breweries 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.