Correlation Between Usha Martin and Cantabil Retail

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

Diversification Opportunities for Usha Martin and Cantabil Retail

-0.23

Correlation Coefficient

Usha Martin  Cantabil Retail

Very good diversification

The 3 months correlation between Usha and Cantabil is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Usha Martin Education and Cantabil Retail India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cantabil Retail India 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 Cantabil Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cantabil Retail India has no effect on the direction of Usha Martin i.e., Usha Martin and Cantabil Retail go up and down completely randomly.

Pair Corralation between Usha Martin and Cantabil Retail

Assuming the 90 days trading horizon Usha Martin Education is expected to under-perform the Cantabil Retail. But the stock apears to be less risky and, when comparing its historical volatility, Usha Martin Education is 1.25 times less risky than Cantabil Retail. The stock trades about -0.3 of its potential returns per unit of risk. The Cantabil Retail India is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  26,752  in Cantabil Retail India on October 23, 2024 and sell it today you would earn a total of  2,868  from holding Cantabil Retail India or generate 10.72% 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.  Cantabil Retail India

Usha Martin Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Usha Martin Education has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Cantabil Retail India

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cantabil Retail India are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental drivers, Cantabil Retail demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Usha Martin and Cantabil Retail

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

The idea behind Usha Martin Education and Cantabil Retail India 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.