Correlation Between Sonata Software and Fiberweb (India)

Can any of the company-specific risk be diversified away by investing in both Sonata Software and Fiberweb (India) 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 Fiberweb (India) 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 Fiberweb Limited, you can compare the effects of market volatilities on Sonata Software and Fiberweb (India) 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 Fiberweb (India). Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonata Software and Fiberweb (India).

Diversification Opportunities for Sonata Software and Fiberweb (India)

0.0

Correlation Coefficient

Sonata Software  Fiberweb (India)

Pay attention - limited upside

The 3 months correlation between Sonata and Fiberweb is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sonata Software Limited and Fiberweb Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiberweb Limited 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 Fiberweb (India). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiberweb Limited has no effect on the direction of Sonata Software i.e., Sonata Software and Fiberweb (India) go up and down completely randomly.

Pair Corralation between Sonata Software and Fiberweb (India)

If you would invest (100.00) in Fiberweb Limited on December 28, 2024 and sell it today you would earn a total of  100.00  from holding Fiberweb Limited or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Sonata Software Limited  vs.  Fiberweb Limited

Sonata Software

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Fiberweb Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fiberweb Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Fiberweb (India) is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Sonata Software and Fiberweb (India)

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

The idea behind Sonata Software Limited and Fiberweb Limited 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.