Correlation Between Syrma SGS and Usha Martin

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

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

Diversification Opportunities for Syrma SGS and Usha Martin

0.61

Correlation Coefficient

Syrma SGS  Usha Martin

Poor diversification

The 3 months correlation between Syrma and Usha is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Syrma SGS Technology 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 Syrma SGS 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 Syrma SGS Technology 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 Syrma SGS i.e., Syrma SGS and Usha Martin go up and down completely randomly.

Pair Corralation between Syrma SGS and Usha Martin

Assuming the 90 days trading horizon Syrma SGS Technology is expected to generate 1.09 times more return on investment than Usha Martin. However, Syrma SGS is 1.09 times more volatile than Usha Martin Education. It trades about 0.15 of its potential returns per unit of risk. Usha Martin Education is currently generating about 0.11 per unit of risk. If you would invest  45,290  in Syrma SGS Technology on September 14, 2024 and sell it today you would earn a total of  14,690  from holding Syrma SGS Technology or generate 32.44% return on investment over 90 days.

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

Syrma SGS Technology  vs.  Usha Martin Education

Syrma SGS Technology

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Syrma SGS Technology are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Syrma SGS displayed solid returns over the last few months and may actually be approaching a breakup point.

Usha Martin Education

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Usha Martin Education are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, Usha Martin exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Syrma SGS and Usha Martin

The main advantage of trading using opposite Syrma SGS and Usha Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Syrma SGS 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 Syrma SGS Technology 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.