Correlation Between Sonata Software and Jindal Drilling

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

Diversification Opportunities for Sonata Software and Jindal Drilling

-0.57

Correlation Coefficient

Sonata Software  Jindal Drilling

Excellent diversification

The 3 months correlation between Sonata and Jindal is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Sonata Software Limited and Jindal Drilling And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jindal Drilling And 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 Jindal Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jindal Drilling And has no effect on the direction of Sonata Software i.e., Sonata Software and Jindal Drilling go up and down completely randomly.

Pair Corralation between Sonata Software and Jindal Drilling

Assuming the 90 days trading horizon Sonata Software Limited is expected to under-perform the Jindal Drilling. But the stock apears to be less risky and, when comparing its historical volatility, Sonata Software Limited is 1.56 times less risky than Jindal Drilling. The stock trades about -0.28 of its potential returns per unit of risk. The Jindal Drilling And is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  74,885  in Jindal Drilling And on December 26, 2024 and sell it today you would earn a total of  14,320  from holding Jindal Drilling And or generate 19.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Sonata Software Limited  vs.  Jindal Drilling And

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.

Jindal Drilling And

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jindal Drilling And are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward indicators, Jindal Drilling disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sonata Software and Jindal Drilling

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

The idea behind Sonata Software Limited and Jindal Drilling And 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.