Correlation Between Sapphire Foods and Usha Martin

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

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

Diversification Opportunities for Sapphire Foods and Usha Martin

-0.26

Correlation Coefficient

Sapphire Foods  Usha Martin

Very good diversification

The 3 months correlation between Sapphire and Usha is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Sapphire Foods India 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 Sapphire Foods 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 Sapphire Foods India 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 Sapphire Foods i.e., Sapphire Foods and Usha Martin go up and down completely randomly.

Pair Corralation between Sapphire Foods and Usha Martin

Assuming the 90 days trading horizon Sapphire Foods India is expected to generate 0.62 times more return on investment than Usha Martin. However, Sapphire Foods India is 1.63 times less risky than Usha Martin. It trades about 0.07 of its potential returns per unit of risk. Usha Martin Education is currently generating about -0.22 per unit of risk. If you would invest  34,070  in Sapphire Foods India on October 8, 2024 and sell it today you would earn a total of  815.00  from holding Sapphire Foods India or generate 2.39% return on investment over 90 days.

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

Sapphire Foods India  vs.  Usha Martin Education

Sapphire Foods India

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sapphire Foods India has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, Sapphire Foods is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

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 weak essential indicators, Usha Martin may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sapphire Foods and Usha Martin

The main advantage of trading using opposite Sapphire Foods and Usha Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sapphire Foods 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 Sapphire Foods India 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.