Correlation Between NRB Industrial and PTC India

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

Diversification Opportunities for NRB Industrial and PTC India

0.73

Correlation Coefficient

NRB Industrial  PTC India

Poor diversification

The 3 months correlation between NRB and PTC is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding NRB Industrial Bearings 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 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 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 NRB Industrial i.e., NRB Industrial and PTC India go up and down completely randomly.

Pair Corralation between NRB Industrial and PTC India

Assuming the 90 days trading horizon NRB Industrial is expected to generate 2.73 times less return on investment than PTC India. But when comparing it to its historical volatility, NRB Industrial Bearings is 1.1 times less risky than PTC India. It trades about 0.03 of its potential returns per unit of risk. PTC India Financial is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,678  in PTC India Financial on October 11, 2024 and sell it today you would earn a total of  2,416  from holding PTC India Financial or generate 143.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.59%
Values	Daily Returns

NRB Industrial Bearings  vs.  PTC India Financial

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 unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with NRB Industrial and PTC India

The main advantage of trading using opposite NRB Industrial and PTC India positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NRB Industrial 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 NRB Industrial Bearings 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.