Correlation Between Cambridge Technology and Electronics Mart
Can any of the company-specific risk be diversified away by investing in both Cambridge Technology and Electronics Mart 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 Cambridge Technology and Electronics Mart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cambridge Technology Enterprises and Electronics Mart India, you can compare the effects of market volatilities on Cambridge Technology and Electronics Mart 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 Cambridge Technology with a short position of Electronics Mart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambridge Technology and Electronics Mart.
Diversification Opportunities for Cambridge Technology and Electronics Mart
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Cambridge and Electronics is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Cambridge Technology Enterpris and Electronics Mart India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronics Mart India and Cambridge Technology 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 Cambridge Technology Enterprises are associated (or correlated) with Electronics Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronics Mart India has no effect on the direction of Cambridge Technology i.e., Cambridge Technology and Electronics Mart go up and down completely randomly.
Pair Corralation between Cambridge Technology and Electronics Mart
Assuming the 90 days trading horizon Cambridge Technology Enterprises is expected to under-perform the Electronics Mart. In addition to that, Cambridge Technology is 1.56 times more volatile than Electronics Mart India. It trades about -0.59 of its total potential returns per unit of risk. Electronics Mart India is currently generating about -0.2 per unit of volatility. If you would invest 13,005 in Electronics Mart India on December 15, 2024 and sell it today you would lose (1,368) from holding Electronics Mart India or give up 10.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cambridge Technology Enterpris vs. Electronics Mart India
Performance |
| Timeline |
| Cambridge Technology |
| Electronics Mart India |
Cambridge Technology and Electronics Mart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cambridge Technology and Electronics Mart
The main advantage of trading using opposite Cambridge Technology and Electronics Mart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cambridge Technology position performs unexpectedly, Electronics Mart 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 Electronics Mart will offset losses from the drop in Electronics Mart's long position.| Cambridge Technology vs. Foods Inns Limited | ||
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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