Correlation Between N B and PTC India

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

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

Diversification Opportunities for N B and PTC India

-0.39

Correlation Coefficient

N B  PTC India

Very good diversification

The 3 months correlation between NBIFIN and PTC is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding N B I and PTC India Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTC India Financial and N B 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 N B I are associated (or correlated) with PTC India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTC India Financial has no effect on the direction of N B i.e., N B and PTC India go up and down completely randomly.

Pair Corralation between N B and PTC India

Assuming the 90 days trading horizon N B I is expected to generate 1.4 times more return on investment than PTC India. However, N B is 1.4 times more volatile than PTC India Financial. It trades about 0.22 of its potential returns per unit of risk. PTC India Financial is currently generating about -0.02 per unit of risk. If you would invest  241,125  in N B I on October 6, 2024 and sell it today you would earn a total of  78,115  from holding N B I or generate 32.4% return on investment over 90 days.

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

N B I  vs.  PTC India Financial

N B I

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in N B I are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent technical and fundamental indicators, N B sustained solid returns over the last few months and may actually be approaching a breakup point.

PTC India Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PTC India Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with N B and PTC India

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

The idea behind N B I and PTC India Financial 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.