Correlation Between UltraTech Cement and Speciality Restaurants

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

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

Diversification Opportunities for UltraTech Cement and Speciality Restaurants

-0.19

Correlation Coefficient

UltraTech Cement  Speciality Restaurants

Good diversification

The 3 months correlation between UltraTech and Speciality is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding UltraTech Cement Limited and Speciality Restaurants Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Speciality Restaurants and UltraTech Cement 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 UltraTech Cement Limited are associated (or correlated) with Speciality Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Speciality Restaurants has no effect on the direction of UltraTech Cement i.e., UltraTech Cement and Speciality Restaurants go up and down completely randomly.

Pair Corralation between UltraTech Cement and Speciality Restaurants

Assuming the 90 days trading horizon UltraTech Cement Limited is expected to generate 0.56 times more return on investment than Speciality Restaurants. However, UltraTech Cement Limited is 1.78 times less risky than Speciality Restaurants. It trades about 0.08 of its potential returns per unit of risk. Speciality Restaurants Limited is currently generating about -0.04 per unit of risk. If you would invest  719,444  in UltraTech Cement Limited on October 7, 2024 and sell it today you would earn a total of  459,156  from holding UltraTech Cement Limited or generate 63.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.59%
Values	Daily Returns

UltraTech Cement Limited  vs.  Speciality Restaurants Limited

UltraTech Cement

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in UltraTech Cement Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, UltraTech Cement is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Speciality Restaurants

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Speciality Restaurants Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with UltraTech Cement and Speciality Restaurants

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

The idea behind UltraTech Cement Limited and Speciality Restaurants Limited 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..