Correlation Between UltraTech Cement and Zomato

Can any of the company-specific risk be diversified away by investing in both UltraTech Cement and Zomato 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 Zomato 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 Zomato Limited, you can compare the effects of market volatilities on UltraTech Cement and Zomato 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 Zomato. Check out your portfolio center. Please also check ongoing floating volatility patterns of UltraTech Cement and Zomato.

Diversification Opportunities for UltraTech Cement and Zomato

0.33

Correlation Coefficient

UltraTech Cement  Zomato

Weak diversification

The 3 months correlation between UltraTech and Zomato is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding UltraTech Cement Limited and Zomato Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zomato Limited 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 Zomato. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zomato Limited has no effect on the direction of UltraTech Cement i.e., UltraTech Cement and Zomato go up and down completely randomly.

Pair Corralation between UltraTech Cement and Zomato

Assuming the 90 days trading horizon UltraTech Cement Limited is expected to generate 0.55 times more return on investment than Zomato. However, UltraTech Cement Limited is 1.81 times less risky than Zomato. It trades about 0.02 of its potential returns per unit of risk. Zomato Limited is currently generating about -0.14 per unit of risk. If you would invest  1,135,000  in UltraTech Cement Limited on December 29, 2024 and sell it today you would earn a total of  15,955  from holding UltraTech Cement Limited or generate 1.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

UltraTech Cement Limited  vs.  Zomato Limited

UltraTech Cement

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UltraTech Cement Limited are ranked lower than 1 (%) 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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Zomato Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zomato Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with UltraTech Cement and Zomato

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

The idea behind UltraTech Cement Limited and Zomato 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.