Correlation Between Sportking India and Centum Electronics

Can any of the company-specific risk be diversified away by investing in both Sportking India and Centum Electronics 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 Sportking India and Centum Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sportking India Limited and Centum Electronics Limited, you can compare the effects of market volatilities on Sportking India and Centum Electronics 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 Sportking India with a short position of Centum Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sportking India and Centum Electronics.

Diversification Opportunities for Sportking India and Centum Electronics

0.9

Correlation Coefficient

Sportking India  Centum Electronics

Almost no diversification

The 3 months correlation between Sportking and Centum is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Sportking India Limited and Centum Electronics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centum Electronics and Sportking India 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 Sportking India Limited are associated (or correlated) with Centum Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centum Electronics has no effect on the direction of Sportking India i.e., Sportking India and Centum Electronics go up and down completely randomly.

Pair Corralation between Sportking India and Centum Electronics

Assuming the 90 days trading horizon Sportking India Limited is expected to under-perform the Centum Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Sportking India Limited is 1.02 times less risky than Centum Electronics. The stock trades about -0.12 of its potential returns per unit of risk. The Centum Electronics Limited is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  213,630  in Centum Electronics Limited on December 27, 2024 and sell it today you would lose (52,100) from holding Centum Electronics Limited or give up 24.39% of portfolio value over 90 days.

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

Sportking India Limited  vs.  Centum Electronics Limited

Sportking India

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sportking India Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Centum Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Centum Electronics Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Sportking India and Centum Electronics

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

The idea behind Sportking India Limited and Centum Electronics 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.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.