Correlation Between Kavveri Telecom and Cambridge Technology

Can any of the company-specific risk be diversified away by investing in both Kavveri Telecom and Cambridge Technology 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 Kavveri Telecom and Cambridge Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kavveri Telecom Products and Cambridge Technology Enterprises, you can compare the effects of market volatilities on Kavveri Telecom and Cambridge Technology 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 Kavveri Telecom with a short position of Cambridge Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kavveri Telecom and Cambridge Technology.

Diversification Opportunities for Kavveri Telecom and Cambridge Technology

0.72

Correlation Coefficient

Kavveri Telecom  Cambridge Technology

Poor diversification

The 3 months correlation between Kavveri and Cambridge is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Kavveri Telecom Products and Cambridge Technology Enterpris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambridge Technology and Kavveri Telecom 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 Kavveri Telecom Products are associated (or correlated) with Cambridge Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambridge Technology has no effect on the direction of Kavveri Telecom i.e., Kavveri Telecom and Cambridge Technology go up and down completely randomly.

Pair Corralation between Kavveri Telecom and Cambridge Technology

Assuming the 90 days trading horizon Kavveri Telecom is expected to generate 9.03 times less return on investment than Cambridge Technology. But when comparing it to its historical volatility, Kavveri Telecom Products is 1.01 times less risky than Cambridge Technology. It trades about 0.02 of its potential returns per unit of risk. Cambridge Technology Enterprises is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  3,954  in Cambridge Technology Enterprises on April 3, 2025 and sell it today you would earn a total of  1,093  from holding Cambridge Technology Enterprises or generate 27.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Kavveri Telecom Products  vs.  Cambridge Technology Enterpris

Kavveri Telecom Products

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kavveri Telecom Products are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Kavveri Telecom is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Cambridge Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cambridge Technology Enterprises are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Cambridge Technology exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kavveri Telecom and Cambridge Technology

The main advantage of trading using opposite Kavveri Telecom and Cambridge Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kavveri Telecom position performs unexpectedly, Cambridge Technology 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 Cambridge Technology will offset losses from the drop in Cambridge Technology's long position.

The idea behind Kavveri Telecom Products and Cambridge Technology Enterprises 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.