Correlation Between Global Education and Usha Martin

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

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

Diversification Opportunities for Global Education and Usha Martin

-0.07

Correlation Coefficient

Global Education  Usha Martin

Good diversification

The 3 months correlation between Global and Usha is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Global Education 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 Global Education 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 Global Education 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 Global Education i.e., Global Education and Usha Martin go up and down completely randomly.

Pair Corralation between Global Education and Usha Martin

Assuming the 90 days trading horizon Global Education Limited is expected to generate 15.94 times more return on investment than Usha Martin. However, Global Education is 15.94 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 0.08 per unit of risk. If you would invest  6,215  in Global Education Limited on September 12, 2024 and sell it today you would earn a total of  2,389  from holding Global Education Limited or generate 38.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.42%
Values	Daily Returns

Global Education Limited  vs.  Usha Martin Education

Global Education

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global Education Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental drivers, Global Education sustained solid returns over the last few months and may actually be approaching a breakup point.

Usha Martin Education

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Usha Martin Education are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating essential indicators, Usha Martin may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Global Education and Usha Martin

The main advantage of trading using opposite Global Education and Usha Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Education 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 Global Education 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.

Check out your portfolio center.

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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.