Correlation Between Aban Offshore and Usha Martin

Can any of the company-specific risk be diversified away by investing in both Aban Offshore and Usha Martin 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 Aban Offshore and Usha Martin into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aban Offshore Limited and Usha Martin Education, you can compare the effects of market volatilities on Aban Offshore and Usha Martin 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 Aban Offshore with a short position of Usha Martin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aban Offshore and Usha Martin.

Diversification Opportunities for Aban Offshore and Usha Martin

0.72

Correlation Coefficient

Aban Offshore  Usha Martin

Poor diversification

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

Pair Corralation between Aban Offshore and Usha Martin

Assuming the 90 days trading horizon Aban Offshore Limited is expected to under-perform the Usha Martin. In addition to that, Aban Offshore is 1.12 times more volatile than Usha Martin Education. It trades about -0.25 of its total potential returns per unit of risk. Usha Martin Education is currently generating about -0.15 per unit of volatility. If you would invest  721.00  in Usha Martin Education on December 22, 2024 and sell it today you would lose (175.00) from holding Usha Martin Education or give up 24.27% of portfolio value over 90 days.

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

Aban Offshore Limited  vs.  Usha Martin Education

Aban Offshore Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aban Offshore 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 basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Usha Martin Education

Risk-Adjusted Performance

Very Weak

Over the last 90 days Usha Martin Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Aban Offshore and Usha Martin

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

The idea behind Aban Offshore Limited and Usha Martin Education 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.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.