Correlation Between Sonata Software and Zaggle Prepaid

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

Diversification Opportunities for Sonata Software and Zaggle Prepaid

0.61

Correlation Coefficient

Sonata Software  Zaggle Prepaid

Poor diversification

The 3 months correlation between Sonata and Zaggle is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sonata Software Limited and Zaggle Prepaid Ocean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zaggle Prepaid Ocean 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 Zaggle Prepaid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zaggle Prepaid Ocean has no effect on the direction of Sonata Software i.e., Sonata Software and Zaggle Prepaid go up and down completely randomly.

Pair Corralation between Sonata Software and Zaggle Prepaid

Assuming the 90 days trading horizon Sonata Software Limited is expected to under-perform the Zaggle Prepaid. But the stock apears to be less risky and, when comparing its historical volatility, Sonata Software Limited is 1.37 times less risky than Zaggle Prepaid. The stock trades about 0.0 of its potential returns per unit of risk. The Zaggle Prepaid Ocean is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  21,255  in Zaggle Prepaid Ocean on October 7, 2024 and sell it today you would earn a total of  34,960  from holding Zaggle Prepaid Ocean or generate 164.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.18%
Values	Daily Returns

Sonata Software Limited  vs.  Zaggle Prepaid Ocean

Sonata Software

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sonata Software Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal technical and fundamental indicators, Sonata Software may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Zaggle Prepaid Ocean

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zaggle Prepaid Ocean are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady technical and fundamental indicators, Zaggle Prepaid sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sonata Software and Zaggle Prepaid

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

The idea behind Sonata Software Limited and Zaggle Prepaid Ocean 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.