Correlation Between Capacite Infraprojects and N B

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

By analyzing existing cross correlation between Capacite Infraprojects Limited and N B I, you can compare the effects of market volatilities on Capacite Infraprojects and N B 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 Capacite Infraprojects with a short position of N B. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capacite Infraprojects and N B.

Diversification Opportunities for Capacite Infraprojects and N B

0.79

Correlation Coefficient

Capacite Infraprojects  N B

Poor diversification

The 3 months correlation between Capacite and NBIFIN is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Capacite Infraprojects Limited and N B I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on N B I and Capacite Infraprojects 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 Capacite Infraprojects Limited are associated (or correlated) with N B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of N B I has no effect on the direction of Capacite Infraprojects i.e., Capacite Infraprojects and N B go up and down completely randomly.

Pair Corralation between Capacite Infraprojects and N B

Assuming the 90 days trading horizon Capacite Infraprojects is expected to generate 1.84 times less return on investment than N B. But when comparing it to its historical volatility, Capacite Infraprojects Limited is 1.4 times less risky than N B. It trades about 0.35 of its potential returns per unit of risk. N B I is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest  257,710  in N B I on September 23, 2024 and sell it today you would earn a total of  110,165  from holding N B I or generate 42.75% return on investment over 90 days.

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

Capacite Infraprojects Limited  vs.  N B I

Capacite Infraprojects

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Capacite Infraprojects Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady forward indicators, Capacite Infraprojects unveiled solid returns over the last few months and may actually be approaching a breakup point.

N B I

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in N B I are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, N B sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capacite Infraprojects and N B

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

The idea behind Capacite Infraprojects Limited and N B I 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.