Correlation Between Usha Resources and Compania

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

By analyzing existing cross correlation between Usha Resources and Compania de Minas, you can compare the effects of market volatilities on Usha Resources and Compania 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 Resources with a short position of Compania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Usha Resources and Compania.

Diversification Opportunities for Usha Resources and Compania

0.25

Correlation Coefficient

Usha Resources  Compania

Modest diversification

The 3 months correlation between Usha and Compania is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Usha Resources and Compania de Minas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania de Minas and Usha Resources 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 Resources are associated (or correlated) with Compania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania de Minas has no effect on the direction of Usha Resources i.e., Usha Resources and Compania go up and down completely randomly.

Pair Corralation between Usha Resources and Compania

Assuming the 90 days horizon Usha Resources is expected to under-perform the Compania. In addition to that, Usha Resources is 5.28 times more volatile than Compania de Minas. It trades about -0.04 of its total potential returns per unit of risk. Compania de Minas is currently generating about 0.17 per unit of volatility. If you would invest  1,230  in Compania de Minas on October 26, 2024 and sell it today you would earn a total of  78.00  from holding Compania de Minas or generate 6.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.48%
Values	Daily Returns

Usha Resources  vs.  Compania de Minas

Usha Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Usha Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Compania de Minas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compania de Minas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Compania is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Usha Resources and Compania

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

The idea behind Usha Resources and Compania de Minas 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..