Correlation Between Usha Martin and Gujarat Fluorochemicals

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

Diversification Opportunities for Usha Martin and Gujarat Fluorochemicals

-0.3

Correlation Coefficient

Usha Martin  Gujarat Fluorochemicals

Very good diversification

The 3 months correlation between Usha and Gujarat is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Usha Martin Education and Gujarat Fluorochemicals Limite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gujarat Fluorochemicals 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 Gujarat Fluorochemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gujarat Fluorochemicals has no effect on the direction of Usha Martin i.e., Usha Martin and Gujarat Fluorochemicals go up and down completely randomly.

Pair Corralation between Usha Martin and Gujarat Fluorochemicals

Assuming the 90 days trading horizon Usha Martin is expected to generate 1.97 times less return on investment than Gujarat Fluorochemicals. In addition to that, Usha Martin is 1.04 times more volatile than Gujarat Fluorochemicals Limited. It trades about 0.07 of its total potential returns per unit of risk. Gujarat Fluorochemicals Limited is currently generating about 0.14 per unit of volatility. If you would invest  316,577  in Gujarat Fluorochemicals Limited on September 4, 2024 and sell it today you would earn a total of  88,863  from holding Gujarat Fluorochemicals Limited or generate 28.07% return on investment over 90 days.

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

Usha Martin Education  vs.  Gujarat Fluorochemicals Limite

Usha Martin Education

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Usha Martin Education are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, Usha Martin exhibited solid returns over the last few months and may actually be approaching a breakup point.

Gujarat Fluorochemicals

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gujarat Fluorochemicals Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical indicators, Gujarat Fluorochemicals exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Usha Martin and Gujarat Fluorochemicals

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

The idea behind Usha Martin Education and Gujarat Fluorochemicals 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.