Correlation Between Astar and Nippon India

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

By analyzing existing cross correlation between Astar and Nippon India ETF, you can compare the effects of market volatilities on Astar and Nippon India 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 Astar with a short position of Nippon India. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and Nippon India.

Diversification Opportunities for Astar and Nippon India

-0.94

Correlation Coefficient

Astar  Nippon India

Pay attention - limited upside

The 3 months correlation between Astar and Nippon is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Nippon India ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon India ETF and Astar 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 Astar are associated (or correlated) with Nippon India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon India ETF has no effect on the direction of Astar i.e., Astar and Nippon India go up and down completely randomly.

Pair Corralation between Astar and Nippon India

Assuming the 90 days trading horizon Astar is expected to under-perform the Nippon India. In addition to that, Astar is 20.33 times more volatile than Nippon India ETF. It trades about -0.17 of its total potential returns per unit of risk. Nippon India ETF is currently generating about 0.15 per unit of volatility. If you would invest  5,873  in Nippon India ETF on December 25, 2024 and sell it today you would earn a total of  131.00  from holding Nippon India ETF or generate 2.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Astar  vs.  Nippon India ETF

Astar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Astar 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 Crypto's fundamental 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 Astar shareholders.

Nippon India ETF

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nippon India ETF are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Nippon India is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Astar and Nippon India

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

The idea behind Astar and Nippon India ETF 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.