Correlation Between Compania and Usha Resources

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

By analyzing existing cross correlation between Compania de Minas and Usha Resources, you can compare the effects of market volatilities on Compania and Usha Resources 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 Compania with a short position of Usha Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania and Usha Resources.

Diversification Opportunities for Compania and Usha Resources

0.37

Correlation Coefficient

Compania  Usha Resources

Weak diversification

The 3 months correlation between Compania and Usha is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Compania de Minas and Usha Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Usha Resources and Compania 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 Compania de Minas are associated (or correlated) with Usha Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Usha Resources has no effect on the direction of Compania i.e., Compania and Usha Resources go up and down completely randomly.

Pair Corralation between Compania and Usha Resources

Considering the 90-day investment horizon Compania de Minas is expected to generate 0.25 times more return on investment than Usha Resources. However, Compania de Minas is 4.04 times less risky than Usha Resources. It trades about 0.05 of its potential returns per unit of risk. Usha Resources is currently generating about 0.01 per unit of risk. If you would invest  821.00  in Compania de Minas on October 11, 2024 and sell it today you would earn a total of  441.00  from holding Compania de Minas or generate 53.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Compania de Minas  vs.  Usha Resources

Compania de Minas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compania de Minas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Usha Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Usha Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Compania and Usha Resources

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

The idea behind Compania de Minas and Usha Resources 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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..