Correlation Between Sonata Software and Centum Electronics
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By analyzing existing cross correlation between Sonata Software Limited and Centum Electronics Limited, you can compare the effects of market volatilities on Sonata Software 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 Sonata Software with a short position of Centum Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonata Software and Centum Electronics.
Diversification Opportunities for Sonata Software and Centum Electronics
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sonata and Centum is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Sonata Software 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 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 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 Sonata Software i.e., Sonata Software and Centum Electronics go up and down completely randomly.
Pair Corralation between Sonata Software and Centum Electronics
Assuming the 90 days trading horizon Sonata Software Limited is expected to generate 1.06 times more return on investment than Centum Electronics. However, Sonata Software is 1.06 times more volatile than Centum Electronics Limited. It trades about 0.25 of its potential returns per unit of risk. Centum Electronics Limited is currently generating about -0.05 per unit of risk. If you would invest 59,100 in Sonata Software Limited on September 12, 2024 and sell it today you would earn a total of 7,990 from holding Sonata Software Limited or generate 13.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Sonata Software Limited vs. Centum Electronics Limited
Performance |
| Timeline |
| Sonata Software |
| Centum Electronics |
Sonata Software and Centum Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonata Software and Centum Electronics
The main advantage of trading using opposite Sonata Software and Centum Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonata Software 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.| Sonata Software vs. Reliance Industries Limited | Sonata Software vs. Oil Natural Gas | Sonata Software vs. Indian Oil | Sonata Software vs. HDFC Bank Limited |
| Centum Electronics vs. Reliance Industries Limited | Centum Electronics vs. Oil Natural Gas | Centum Electronics vs. Indian Oil | Centum Electronics vs. HDFC Bank Limited |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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