Correlation Between Niraj Ispat and REC

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

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

Diversification Opportunities for Niraj Ispat and REC

-0.82

Correlation Coefficient

Niraj Ispat  REC

Pay attention - limited upside

The 3 months correlation between Niraj and REC is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Niraj Ispat Industries and REC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REC Limited and Niraj Ispat 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 Niraj Ispat Industries are associated (or correlated) with REC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REC Limited has no effect on the direction of Niraj Ispat i.e., Niraj Ispat and REC go up and down completely randomly.

Pair Corralation between Niraj Ispat and REC

Assuming the 90 days trading horizon Niraj Ispat Industries is expected to generate 0.3 times more return on investment than REC. However, Niraj Ispat Industries is 3.33 times less risky than REC. It trades about 0.16 of its potential returns per unit of risk. REC Limited is currently generating about -0.07 per unit of risk. If you would invest  24,518  in Niraj Ispat Industries on December 24, 2024 and sell it today you would earn a total of  2,198  from holding Niraj Ispat Industries or generate 8.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Niraj Ispat Industries  vs.  REC Limited

Niraj Ispat Industries

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Niraj Ispat Industries are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Niraj Ispat may actually be approaching a critical reversion point that can send shares even higher in April 2025.

REC Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days REC Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Niraj Ispat and REC

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

The idea behind Niraj Ispat Industries and REC 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.