Correlation Between Usha Martin and Persistent Systems

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

Diversification Opportunities for Usha Martin and Persistent Systems

0.31

Correlation Coefficient

Usha Martin  Persistent Systems

Weak diversification

The 3 months correlation between Usha and Persistent is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Usha Martin Education and Persistent Systems Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Persistent Systems 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 Persistent Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Persistent Systems has no effect on the direction of Usha Martin i.e., Usha Martin and Persistent Systems go up and down completely randomly.

Pair Corralation between Usha Martin and Persistent Systems

Assuming the 90 days trading horizon Usha Martin Education is expected to under-perform the Persistent Systems. In addition to that, Usha Martin is 1.13 times more volatile than Persistent Systems Limited. It trades about -0.2 of its total potential returns per unit of risk. Persistent Systems Limited is currently generating about -0.06 per unit of volatility. If you would invest  600,007  in Persistent Systems Limited on December 4, 2024 and sell it today you would lose (70,752) from holding Persistent Systems Limited or give up 11.79% of portfolio value over 90 days.

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

Usha Martin Education  vs.  Persistent Systems Limited

Usha Martin Education

Risk-Adjusted Performance

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 unfluctuating performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Persistent Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Persistent Systems Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Usha Martin and Persistent Systems

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

The idea behind Usha Martin Education and Persistent Systems 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.