Correlation Between NATIONAL INVESTMENT and MCB INDIA

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

By analyzing existing cross correlation between NATIONAL INVESTMENT TRUST and MCB INDIA SOVEREIGN, you can compare the effects of market volatilities on NATIONAL INVESTMENT and MCB 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 NATIONAL INVESTMENT with a short position of MCB INDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NATIONAL INVESTMENT and MCB INDIA.

Diversification Opportunities for NATIONAL INVESTMENT and MCB INDIA

-0.04

Correlation Coefficient

NATIONAL INVESTMENT  MCB INDIA

Good diversification

The 3 months correlation between NATIONAL and MCB is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding NATIONAL INVESTMENT TRUST and MCB INDIA SOVEREIGN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCB INDIA SOVEREIGN and NATIONAL INVESTMENT 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 NATIONAL INVESTMENT TRUST are associated (or correlated) with MCB INDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCB INDIA SOVEREIGN has no effect on the direction of NATIONAL INVESTMENT i.e., NATIONAL INVESTMENT and MCB INDIA go up and down completely randomly.

Pair Corralation between NATIONAL INVESTMENT and MCB INDIA

Assuming the 90 days trading horizon NATIONAL INVESTMENT TRUST is expected to under-perform the MCB INDIA. In addition to that, NATIONAL INVESTMENT is 12.56 times more volatile than MCB INDIA SOVEREIGN. It trades about -0.05 of its total potential returns per unit of risk. MCB INDIA SOVEREIGN is currently generating about -0.08 per unit of volatility. If you would invest  742.00  in MCB INDIA SOVEREIGN on October 26, 2024 and sell it today you would lose (11.00) from holding MCB INDIA SOVEREIGN or give up 1.48% of portfolio value over 90 days.

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

NATIONAL INVESTMENT TRUST  vs.  MCB INDIA SOVEREIGN

NATIONAL INVESTMENT TRUST

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NATIONAL INVESTMENT TRUST has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady 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.

MCB INDIA SOVEREIGN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MCB INDIA SOVEREIGN has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, MCB INDIA is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with NATIONAL INVESTMENT and MCB INDIA

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

The idea behind NATIONAL INVESTMENT TRUST and MCB INDIA SOVEREIGN 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.