Correlation Between Sonata Software and 360 ONE

Can any of the company-specific risk be diversified away by investing in both Sonata Software and 360 ONE 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 Sonata Software and 360 ONE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sonata Software Limited and 360 ONE WAM, you can compare the effects of market volatilities on Sonata Software and 360 ONE 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 Sonata Software with a short position of 360 ONE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonata Software and 360 ONE.

Diversification Opportunities for Sonata Software and 360 ONE

0.38

Correlation Coefficient

Sonata Software  360 ONE

Weak diversification

The 3 months correlation between Sonata and 360 is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Sonata Software Limited and 360 ONE WAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 360 ONE WAM and Sonata 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 Sonata Software Limited are associated (or correlated) with 360 ONE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 360 ONE WAM has no effect on the direction of Sonata Software i.e., Sonata Software and 360 ONE go up and down completely randomly.

Pair Corralation between Sonata Software and 360 ONE

Assuming the 90 days trading horizon Sonata Software is expected to generate 4.24 times less return on investment than 360 ONE. In addition to that, Sonata Software is 1.08 times more volatile than 360 ONE WAM. It trades about 0.03 of its total potential returns per unit of risk. 360 ONE WAM is currently generating about 0.12 per unit of volatility. If you would invest  46,193  in 360 ONE WAM on October 23, 2024 and sell it today you would earn a total of  75,457  from holding 360 ONE WAM or generate 163.35% return on investment over 90 days.

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

Sonata Software Limited  vs.  360 ONE WAM

Sonata Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sonata Software Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

360 ONE WAM

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in 360 ONE WAM are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, 360 ONE sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sonata Software and 360 ONE

The main advantage of trading using opposite Sonata Software and 360 ONE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonata Software position performs unexpectedly, 360 ONE 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 360 ONE will offset losses from the drop in 360 ONE's long position.

The idea behind Sonata Software Limited and 360 ONE WAM 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.