Correlation Between Usha Martin and Bikaji Foods

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

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

Diversification Opportunities for Usha Martin and Bikaji Foods

-0.2

Correlation Coefficient

Usha Martin  Bikaji Foods

Good diversification

The 3 months correlation between Usha and Bikaji is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Usha Martin Education and Bikaji Foods International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bikaji Foods Interna and Usha Martin 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 Usha Martin Education are associated (or correlated) with Bikaji Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bikaji Foods Interna has no effect on the direction of Usha Martin i.e., Usha Martin and Bikaji Foods go up and down completely randomly.

Pair Corralation between Usha Martin and Bikaji Foods

Assuming the 90 days trading horizon Usha Martin is expected to generate 1.37 times less return on investment than Bikaji Foods. In addition to that, Usha Martin is 1.63 times more volatile than Bikaji Foods International. It trades about 0.04 of its total potential returns per unit of risk. Bikaji Foods International is currently generating about 0.08 per unit of volatility. If you would invest  38,271  in Bikaji Foods International on September 3, 2024 and sell it today you would earn a total of  41,999  from holding Bikaji Foods International or generate 109.74% return on investment over 90 days.

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

Usha Martin Education  vs.  Bikaji Foods International

Usha Martin Education

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Usha Martin Education are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Usha Martin is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Bikaji Foods Interna

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bikaji Foods International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Usha Martin and Bikaji Foods

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

The idea behind Usha Martin Education and Bikaji Foods International 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.