Correlation Between NMDC and Apollo Sindoori

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

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

Diversification Opportunities for NMDC and Apollo Sindoori

0.19

Correlation Coefficient

NMDC  Apollo Sindoori

Average diversification

The 3 months correlation between NMDC and Apollo is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding NMDC Limited and Apollo Sindoori Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Sindoori Hotels and NMDC 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 NMDC Limited are associated (or correlated) with Apollo Sindoori. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Sindoori Hotels has no effect on the direction of NMDC i.e., NMDC and Apollo Sindoori go up and down completely randomly.

Pair Corralation between NMDC and Apollo Sindoori

Assuming the 90 days trading horizon NMDC Limited is expected to generate 13.99 times more return on investment than Apollo Sindoori. However, NMDC is 13.99 times more volatile than Apollo Sindoori Hotels. It trades about 0.13 of its potential returns per unit of risk. Apollo Sindoori Hotels is currently generating about -0.07 per unit of risk. If you would invest  7,081  in NMDC Limited on October 25, 2024 and sell it today you would lose (512.00) from holding NMDC Limited or give up 7.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

NMDC Limited  vs.  Apollo Sindoori Hotels

NMDC Limited

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NMDC Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, NMDC unveiled solid returns over the last few months and may actually be approaching a breakup point.

Apollo Sindoori Hotels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apollo Sindoori Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Apollo Sindoori is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with NMDC and Apollo Sindoori

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

The idea behind NMDC Limited and Apollo Sindoori Hotels 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.