Correlation Between Neogen Chemicals and NIIT

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

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

Diversification Opportunities for Neogen Chemicals and NIIT

0.38

Correlation Coefficient

Neogen Chemicals  NIIT

Weak diversification

The 3 months correlation between Neogen and NIIT is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Neogen Chemicals Limited and NIIT Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIIT Limited and Neogen Chemicals 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 Neogen Chemicals Limited are associated (or correlated) with NIIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIIT Limited has no effect on the direction of Neogen Chemicals i.e., Neogen Chemicals and NIIT go up and down completely randomly.

Pair Corralation between Neogen Chemicals and NIIT

Assuming the 90 days trading horizon Neogen Chemicals Limited is expected to under-perform the NIIT. In addition to that, Neogen Chemicals is 1.03 times more volatile than NIIT Limited. It trades about -0.15 of its total potential returns per unit of risk. NIIT Limited is currently generating about -0.14 per unit of volatility. If you would invest  21,032  in NIIT Limited on October 9, 2024 and sell it today you would lose (1,889) from holding NIIT Limited or give up 8.98% of portfolio value over 90 days.

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

Neogen Chemicals Limited  vs.  NIIT Limited

Neogen Chemicals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Neogen Chemicals Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Neogen Chemicals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

NIIT Limited

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with Neogen Chemicals and NIIT

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

The idea behind Neogen Chemicals Limited and NIIT 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.