Correlation Between NRB Industrial and JTL Industries

Can any of the company-specific risk be diversified away by investing in both NRB Industrial and JTL Industries 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 JTL Industries 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 JTL Industries, you can compare the effects of market volatilities on NRB Industrial and JTL Industries 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 JTL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of NRB Industrial and JTL Industries.

Diversification Opportunities for NRB Industrial and JTL Industries

0.01

Correlation Coefficient

NRB Industrial  JTL Industries

Significant diversification

The 3 months correlation between NRB and JTL is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding NRB Industrial Bearings and JTL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JTL Industries 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 JTL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JTL Industries has no effect on the direction of NRB Industrial i.e., NRB Industrial and JTL Industries go up and down completely randomly.

Pair Corralation between NRB Industrial and JTL Industries

Assuming the 90 days trading horizon NRB Industrial is expected to generate 1.83 times less return on investment than JTL Industries. But when comparing it to its historical volatility, NRB Industrial Bearings is 1.8 times less risky than JTL Industries. It trades about 0.03 of its potential returns per unit of risk. JTL Industries is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  7,895  in JTL Industries on October 25, 2024 and sell it today you would earn a total of  2,830  from holding JTL Industries or generate 35.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.18%
Values	Daily Returns

NRB Industrial Bearings  vs.  JTL Industries

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 latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

JTL Industries

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JTL Industries are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating forward indicators, JTL Industries sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NRB Industrial and JTL Industries

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

The idea behind NRB Industrial Bearings and JTL Industries 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 Commodity Directory module to find actively traded commodities issued by global exchanges.