Correlation Between Wonder Electricals and Usha Martin

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

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

Diversification Opportunities for Wonder Electricals and Usha Martin

-0.45

Correlation Coefficient

Wonder Electricals  Usha Martin

Very good diversification

The 3 months correlation between Wonder and Usha is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Wonder Electricals Limited and Usha Martin Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Usha Martin Education and Wonder Electricals 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 Wonder Electricals Limited are associated (or correlated) with Usha Martin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Usha Martin Education has no effect on the direction of Wonder Electricals i.e., Wonder Electricals and Usha Martin go up and down completely randomly.

Pair Corralation between Wonder Electricals and Usha Martin

Assuming the 90 days trading horizon Wonder Electricals Limited is expected to generate 1.29 times more return on investment than Usha Martin. However, Wonder Electricals is 1.29 times more volatile than Usha Martin Education. It trades about 0.06 of its potential returns per unit of risk. Usha Martin Education is currently generating about -0.15 per unit of risk. If you would invest  15,729  in Wonder Electricals Limited on December 23, 2024 and sell it today you would earn a total of  1,522  from holding Wonder Electricals Limited or generate 9.68% return on investment over 90 days.

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

Wonder Electricals Limited  vs.  Usha Martin Education

Wonder Electricals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wonder Electricals Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Wonder Electricals exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 inconsistent 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.

Pair Trading with Wonder Electricals and Usha Martin

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

The idea behind Wonder Electricals Limited and Usha Martin Education 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..