Correlation Between Sonata Software and Mask Investments

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

Diversification Opportunities for Sonata Software and Mask Investments

SonataMaskDiversified AwaySonataMaskDiversified Away100%
0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Sonata and Mask is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Sonata Software Limited and Mask Investments Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mask Investments 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 Mask Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mask Investments has no effect on the direction of Sonata Software i.e., Sonata Software and Mask Investments go up and down completely randomly.

Pair Corralation between Sonata Software and Mask Investments

Assuming the 90 days trading horizon Sonata Software Limited is expected to under-perform the Mask Investments. But the stock apears to be less risky and, when comparing its historical volatility, Sonata Software Limited is 1.54 times less risky than Mask Investments. The stock trades about -0.33 of its potential returns per unit of risk. The Mask Investments Limited is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  17,327  in Mask Investments Limited on December 17, 2024 and sell it today you would lose (261.00) from holding Mask Investments Limited or give up 1.51% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Sonata Software Limited  vs.  Mask Investments Limited

 Performance 
JavaScript chart by amCharts 3.21.152025FebMar -40-30-20-100
JavaScript chart by amCharts 3.21.15SONATSOFTW MASKINVEST
       Timeline  
Sonata Software 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Sonata Software Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
JavaScript chart by amCharts 3.21.15JanFebMarFebMar350400450500550600650
Mask Investments 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Mask Investments Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.
JavaScript chart by amCharts 3.21.15JanFebMarFebMar160180200220240260

Sonata Software and Mask Investments Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.09-3.81-2.53-1.260.00.91.822.743.66 0.0300.0350.0400.0450.050
JavaScript chart by amCharts 3.21.15SONATSOFTW MASKINVEST
       Returns  

Pair Trading with Sonata Software and Mask Investments

The main advantage of trading using opposite Sonata Software and Mask Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonata Software position performs unexpectedly, Mask Investments 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 Mask Investments will offset losses from the drop in Mask Investments' long position.
The idea behind Sonata Software Limited and Mask Investments 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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