Correlation Between Ravi Kumar and Usha Martin

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

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

Diversification Opportunities for Ravi Kumar and Usha Martin

0.64

Correlation Coefficient

Ravi Kumar  Usha Martin

Poor diversification

The 3 months correlation between Ravi and Usha is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Ravi Kumar Distilleries 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 Ravi Kumar 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 Ravi Kumar Distilleries 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 Ravi Kumar i.e., Ravi Kumar and Usha Martin go up and down completely randomly.

Pair Corralation between Ravi Kumar and Usha Martin

Assuming the 90 days trading horizon Ravi Kumar Distilleries is expected to under-perform the Usha Martin. But the stock apears to be less risky and, when comparing its historical volatility, Ravi Kumar Distilleries is 1.35 times less risky than Usha Martin. The stock trades about -0.07 of its potential returns per unit of risk. The Usha Martin Education is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  654.00  in Usha Martin Education on November 20, 2024 and sell it today you would lose (5.00) from holding Usha Martin Education or give up 0.76% of portfolio value over 90 days.

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

Ravi Kumar Distilleries  vs.  Usha Martin Education

Ravi Kumar Distilleries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ravi Kumar Distilleries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains 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 rather sound essential indicators, Usha Martin is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ravi Kumar and Usha Martin

The main advantage of trading using opposite Ravi Kumar and Usha Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ravi Kumar 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 Ravi Kumar Distilleries 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.