Correlation Between NRB Industrial and Apollo Sindoori

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

By analyzing existing cross correlation between NRB Industrial Bearings and Apollo Sindoori Hotels, you can compare the effects of market volatilities on NRB Industrial and Apollo Sindoori 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 NRB Industrial with a short position of Apollo Sindoori. Check out your portfolio center. Please also check ongoing floating volatility patterns of NRB Industrial and Apollo Sindoori.

Diversification Opportunities for NRB Industrial and Apollo Sindoori

0.42

Correlation Coefficient

NRB Industrial  Apollo Sindoori

Very weak diversification

The 3 months correlation between NRB and Apollo is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding NRB Industrial Bearings and Apollo Sindoori Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Sindoori Hotels and NRB Industrial 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 NRB Industrial Bearings are associated (or correlated) with Apollo Sindoori. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Sindoori Hotels has no effect on the direction of NRB Industrial i.e., NRB Industrial and Apollo Sindoori go up and down completely randomly.

Pair Corralation between NRB Industrial and Apollo Sindoori

Assuming the 90 days trading horizon NRB Industrial Bearings is expected to generate 0.95 times more return on investment than Apollo Sindoori. However, NRB Industrial Bearings is 1.06 times less risky than Apollo Sindoori. It trades about -0.01 of its potential returns per unit of risk. Apollo Sindoori Hotels is currently generating about -0.02 per unit of risk. If you would invest  2,630  in NRB Industrial Bearings on October 27, 2024 and sell it today you would lose (61.00) from holding NRB Industrial Bearings or give up 2.32% of portfolio value over 90 days.

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

NRB Industrial Bearings  vs.  Apollo Sindoori Hotels

NRB Industrial Bearings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NRB Industrial Bearings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, NRB Industrial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Apollo Sindoori Hotels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apollo Sindoori Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Apollo Sindoori is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with NRB Industrial and Apollo Sindoori

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

The idea behind NRB Industrial Bearings and Apollo Sindoori Hotels 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.