Correlation Between NRB Industrial and Sanginita Chemicals

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

Diversification Opportunities for NRB Industrial and Sanginita Chemicals

0.64

Correlation Coefficient

NRB Industrial  Sanginita Chemicals

Poor diversification

The 3 months correlation between NRB and Sanginita is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding NRB Industrial Bearings and Sanginita Chemicals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanginita Chemicals 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 Sanginita Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanginita Chemicals has no effect on the direction of NRB Industrial i.e., NRB Industrial and Sanginita Chemicals go up and down completely randomly.

Pair Corralation between NRB Industrial and Sanginita Chemicals

Assuming the 90 days trading horizon NRB Industrial Bearings is expected to under-perform the Sanginita Chemicals. In addition to that, NRB Industrial is 1.47 times more volatile than Sanginita Chemicals Limited. It trades about -0.21 of its total potential returns per unit of risk. Sanginita Chemicals Limited is currently generating about -0.05 per unit of volatility. If you would invest  1,549  in Sanginita Chemicals Limited on October 21, 2024 and sell it today you would lose (104.00) from holding Sanginita Chemicals Limited or give up 6.71% of portfolio value over 90 days.

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

NRB Industrial Bearings  vs.  Sanginita Chemicals Limited

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 uncertain 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.

Sanginita Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sanginita Chemicals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Sanginita Chemicals is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with NRB Industrial and Sanginita Chemicals

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

The idea behind NRB Industrial Bearings and Sanginita Chemicals 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.