Correlation Between Usha Martin and Sarthak Metals

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

Diversification Opportunities for Usha Martin and Sarthak Metals

-0.19

Correlation Coefficient

Usha Martin  Sarthak Metals

Good diversification

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

Pair Corralation between Usha Martin and Sarthak Metals

Assuming the 90 days trading horizon Usha Martin Education is expected to generate 0.86 times more return on investment than Sarthak Metals. However, Usha Martin Education is 1.16 times less risky than Sarthak Metals. It trades about 0.02 of its potential returns per unit of risk. Sarthak Metals Limited is currently generating about -0.02 per unit of risk. If you would invest  625.00  in Usha Martin Education on October 5, 2024 and sell it today you would earn a total of  42.00  from holding Usha Martin Education or generate 6.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.34%
Values	Daily Returns

Usha Martin Education  vs.  Sarthak Metals Limited

Usha Martin Education

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Usha Martin Education are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, Usha Martin may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Sarthak Metals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sarthak Metals Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Sarthak Metals is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Usha Martin and Sarthak Metals

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

The idea behind Usha Martin Education and Sarthak Metals 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.