Correlation Between GTL and Usha Martin

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

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

Diversification Opportunities for GTL and Usha Martin

0.15

Correlation Coefficient

GTL  Usha Martin

Average diversification

The 3 months correlation between GTL and Usha is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding GTL 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 GTL 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 GTL 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 GTL i.e., GTL and Usha Martin go up and down completely randomly.

Pair Corralation between GTL and Usha Martin

Assuming the 90 days trading horizon GTL Limited is expected to generate 0.82 times more return on investment than Usha Martin. However, GTL Limited is 1.22 times less risky than Usha Martin. It trades about 0.04 of its potential returns per unit of risk. Usha Martin Education is currently generating about -0.06 per unit of risk. If you would invest  1,275  in GTL Limited on August 31, 2024 and sell it today you would earn a total of  22.00  from holding GTL Limited or generate 1.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

GTL Limited  vs.  Usha Martin Education

GTL Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GTL Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, GTL is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Usha Martin Education

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Usha Martin Education are ranked lower than 1 (%) 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 GTL and Usha Martin

The main advantage of trading using opposite GTL and Usha Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GTL 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 GTL 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.