Correlation Between Bajaj Healthcare and Usha Martin

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

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

Diversification Opportunities for Bajaj Healthcare and Usha Martin

0.02

Correlation Coefficient

Bajaj Healthcare  Usha Martin

Significant diversification

The 3 months correlation between Bajaj and Usha is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Bajaj Healthcare 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 Bajaj Healthcare 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 Bajaj Healthcare 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 Bajaj Healthcare i.e., Bajaj Healthcare and Usha Martin go up and down completely randomly.

Pair Corralation between Bajaj Healthcare and Usha Martin

Assuming the 90 days trading horizon Bajaj Healthcare Limited is expected to generate 1.39 times more return on investment than Usha Martin. However, Bajaj Healthcare is 1.39 times more volatile than Usha Martin Education. It trades about 0.17 of its potential returns per unit of risk. Usha Martin Education is currently generating about 0.03 per unit of risk. If you would invest  37,945  in Bajaj Healthcare Limited on October 11, 2024 and sell it today you would earn a total of  19,725  from holding Bajaj Healthcare Limited or generate 51.98% return on investment over 90 days.

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

Bajaj Healthcare Limited  vs.  Usha Martin Education

Bajaj Healthcare

Risk-Adjusted Performance

13 of 100

Good

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

Usha Martin Education

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Usha Martin Education are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Usha Martin is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bajaj Healthcare and Usha Martin

The main advantage of trading using opposite Bajaj Healthcare and Usha Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bajaj Healthcare 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 Bajaj Healthcare 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.