Correlation Between Sonata Software and GM Breweries
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By analyzing existing cross correlation between Sonata Software Limited and GM Breweries Limited, you can compare the effects of market volatilities on Sonata Software and GM Breweries 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 GM Breweries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonata Software and GM Breweries.
Diversification Opportunities for Sonata Software and GM Breweries
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sonata and GMBREW is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Sonata Software Limited and GM Breweries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GM Breweries Limited 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 GM Breweries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GM Breweries Limited has no effect on the direction of Sonata Software i.e., Sonata Software and GM Breweries go up and down completely randomly.
Pair Corralation between Sonata Software and GM Breweries
Assuming the 90 days trading horizon Sonata Software Limited is expected to generate 1.74 times more return on investment than GM Breweries. However, Sonata Software is 1.74 times more volatile than GM Breweries Limited. It trades about 0.11 of its potential returns per unit of risk. GM Breweries Limited is currently generating about 0.06 per unit of risk. If you would invest 59,225 in Sonata Software Limited on August 30, 2024 and sell it today you would earn a total of 3,595 from holding Sonata Software Limited or generate 6.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Sonata Software Limited vs. GM Breweries Limited
Performance |
| Timeline |
| Sonata Software |
| GM Breweries Limited |
Sonata Software and GM Breweries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonata Software and GM Breweries
The main advantage of trading using opposite Sonata Software and GM Breweries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonata Software position performs unexpectedly, GM Breweries 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 GM Breweries will offset losses from the drop in GM Breweries' long position.| Sonata Software vs. Rama Steel Tubes | Sonata Software vs. NMDC Steel Limited | Sonata Software vs. Life Insurance | Sonata Software vs. Zenith Steel Pipes |
| GM Breweries vs. Melstar Information Technologies | GM Breweries vs. Consolidated Construction Consortium | GM Breweries vs. Biofil Chemicals Pharmaceuticals | GM Breweries vs. India Glycols 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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