Correlation Between LTIMindtree and Cantabil Retail

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Can any of the company-specific risk be diversified away by investing in both LTIMindtree and Cantabil Retail 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 LTIMindtree and Cantabil Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LTIMindtree Limited and Cantabil Retail India, you can compare the effects of market volatilities on LTIMindtree and Cantabil Retail 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 LTIMindtree with a short position of Cantabil Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of LTIMindtree and Cantabil Retail.

Diversification Opportunities for LTIMindtree and Cantabil Retail

-0.17
  Correlation Coefficient

Good diversification

The 3 months correlation between LTIMindtree and Cantabil is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding LTIMindtree Limited and Cantabil Retail India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cantabil Retail India and LTIMindtree 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 LTIMindtree Limited are associated (or correlated) with Cantabil Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cantabil Retail India has no effect on the direction of LTIMindtree i.e., LTIMindtree and Cantabil Retail go up and down completely randomly.

Pair Corralation between LTIMindtree and Cantabil Retail

Assuming the 90 days trading horizon LTIMindtree Limited is expected to generate 0.55 times more return on investment than Cantabil Retail. However, LTIMindtree Limited is 1.82 times less risky than Cantabil Retail. It trades about 0.06 of its potential returns per unit of risk. Cantabil Retail India is currently generating about 0.02 per unit of risk. If you would invest  572,570  in LTIMindtree Limited on October 25, 2024 and sell it today you would earn a total of  12,420  from holding LTIMindtree Limited or generate 2.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.24%
ValuesDaily Returns

LTIMindtree Limited  vs.  Cantabil Retail India

 Performance 
       Timeline  
LTIMindtree Limited 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days LTIMindtree Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, LTIMindtree is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.
Cantabil Retail India 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Cantabil Retail India are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental drivers, Cantabil Retail demonstrated solid returns over the last few months and may actually be approaching a breakup point.

LTIMindtree and Cantabil Retail Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with LTIMindtree and Cantabil Retail

The main advantage of trading using opposite LTIMindtree and Cantabil Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LTIMindtree position performs unexpectedly, Cantabil Retail 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 Cantabil Retail will offset losses from the drop in Cantabil Retail's long position.
The idea behind LTIMindtree Limited and Cantabil Retail India 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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