Correlation Between S P and Centum Electronics
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By analyzing existing cross correlation between S P Apparels and Centum Electronics Limited, you can compare the effects of market volatilities on S P 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 S P with a short position of Centum Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of S P and Centum Electronics.
Diversification Opportunities for S P and Centum Electronics
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SPAL and Centum is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding S P Apparels and Centum Electronics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centum Electronics and S P 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 S P Apparels 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 S P i.e., S P and Centum Electronics go up and down completely randomly.
Pair Corralation between S P and Centum Electronics
Assuming the 90 days trading horizon S P is expected to generate 1.19 times less return on investment than Centum Electronics. But when comparing it to its historical volatility, S P Apparels is 1.18 times less risky than Centum Electronics. It trades about 0.08 of its potential returns per unit of risk. Centum Electronics Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 57,325 in Centum Electronics Limited on September 2, 2024 and sell it today you would earn a total of 99,645 from holding Centum Electronics Limited or generate 173.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
S P Apparels vs. Centum Electronics Limited
Performance |
| Timeline |
| S P Apparels |
| Centum Electronics |
S P and Centum Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with S P and Centum Electronics
The main advantage of trading using opposite S P and Centum Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S P 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.The idea behind S P Apparels and Centum Electronics 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.| Centum Electronics vs. The Orissa Minerals | Centum Electronics vs. Malu Paper Mills | Centum Electronics vs. Kingfa Science Technology | Centum Electronics vs. Rico Auto Industries |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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