Correlation Between HMT and Usha Martin

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

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

Diversification Opportunities for HMT and Usha Martin

-0.3

Correlation Coefficient

HMT  Usha Martin

Very good diversification

The 3 months correlation between HMT and Usha is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding HMT 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 HMT 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 HMT 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 HMT i.e., HMT and Usha Martin go up and down completely randomly.

Pair Corralation between HMT and Usha Martin

Assuming the 90 days trading horizon HMT Limited is expected to under-perform the Usha Martin. But the stock apears to be less risky and, when comparing its historical volatility, HMT Limited is 1.24 times less risky than Usha Martin. The stock trades about -0.14 of its potential returns per unit of risk. The Usha Martin Education is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  688.00  in Usha Martin Education on September 5, 2024 and sell it today you would earn a total of  103.00  from holding Usha Martin Education or generate 14.97% return on investment over 90 days.

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

HMT Limited  vs.  Usha Martin Education

HMT Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HMT Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Usha Martin Education

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Usha Martin Education are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating essential indicators, Usha Martin exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HMT and Usha Martin

The main advantage of trading using opposite HMT and Usha Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HMT 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 HMT 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.