Correlation Between NMDC and Arrow Greentech

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

By analyzing existing cross correlation between NMDC Limited and Arrow Greentech Limited, you can compare the effects of market volatilities on NMDC and Arrow Greentech 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 Arrow Greentech. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMDC and Arrow Greentech.

Diversification Opportunities for NMDC and Arrow Greentech

0.75

Correlation Coefficient

NMDC  Arrow Greentech

Poor diversification

The 3 months correlation between NMDC and Arrow is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding NMDC Limited and Arrow Greentech Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Greentech 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 Arrow Greentech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Greentech has no effect on the direction of NMDC i.e., NMDC and Arrow Greentech go up and down completely randomly.

Pair Corralation between NMDC and Arrow Greentech

Assuming the 90 days trading horizon NMDC is expected to generate 2.04 times less return on investment than Arrow Greentech. But when comparing it to its historical volatility, NMDC Limited is 1.69 times less risky than Arrow Greentech. It trades about 0.07 of its potential returns per unit of risk. Arrow Greentech Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  18,259  in Arrow Greentech Limited on November 20, 2024 and sell it today you would earn a total of  39,691  from holding Arrow Greentech Limited or generate 217.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.79%
Values	Daily Returns

NMDC Limited  vs.  Arrow Greentech Limited

NMDC Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days NMDC Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Arrow Greentech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arrow Greentech Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with NMDC and Arrow Greentech

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

The idea behind NMDC Limited and Arrow Greentech 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.