Correlation Between Sonata Software and AXISCADES Technologies

Can any of the company-specific risk be diversified away by investing in both Sonata Software and AXISCADES Technologies 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 AXISCADES Technologies 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 AXISCADES Technologies Limited, you can compare the effects of market volatilities on Sonata Software and AXISCADES Technologies 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 AXISCADES Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonata Software and AXISCADES Technologies.

Diversification Opportunities for Sonata Software and AXISCADES Technologies

0.61

Correlation Coefficient

Sonata Software  AXISCADES Technologies

Poor diversification

The 3 months correlation between Sonata and AXISCADES is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sonata Software Limited and AXISCADES Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXISCADES Technologies 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 AXISCADES Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXISCADES Technologies has no effect on the direction of Sonata Software i.e., Sonata Software and AXISCADES Technologies go up and down completely randomly.

Pair Corralation between Sonata Software and AXISCADES Technologies

Assuming the 90 days trading horizon Sonata Software is expected to generate 2.31 times less return on investment than AXISCADES Technologies. But when comparing it to its historical volatility, Sonata Software Limited is 1.13 times less risky than AXISCADES Technologies. It trades about 0.13 of its potential returns per unit of risk. AXISCADES Technologies Limited is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  84,125  in AXISCADES Technologies Limited on April 24, 2025 and sell it today you would earn a total of  53,315  from holding AXISCADES Technologies Limited or generate 63.38% return on investment over 90 days.

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

Sonata Software Limited  vs.  AXISCADES Technologies Limited

Sonata Software

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sonata Software Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Sonata Software displayed solid returns over the last few months and may actually be approaching a breakup point.

AXISCADES Technologies

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AXISCADES Technologies Limited are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, AXISCADES Technologies exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sonata Software and AXISCADES Technologies

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

The idea behind Sonata Software Limited and AXISCADES Technologies 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .