Correlation Between NMDC and Genus Paper

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

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

Diversification Opportunities for NMDC and Genus Paper

0.59

Correlation Coefficient

NMDC  Genus Paper

Very weak diversification

The 3 months correlation between NMDC and Genus is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding NMDC Limited and Genus Paper Boards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genus Paper Boards 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 Genus Paper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genus Paper Boards has no effect on the direction of NMDC i.e., NMDC and Genus Paper go up and down completely randomly.

Pair Corralation between NMDC and Genus Paper

Assuming the 90 days trading horizon NMDC Limited is expected to generate 0.92 times more return on investment than Genus Paper. However, NMDC Limited is 1.09 times less risky than Genus Paper. It trades about 0.0 of its potential returns per unit of risk. Genus Paper Boards is currently generating about -0.11 per unit of risk. If you would invest  6,909  in NMDC Limited on December 25, 2024 and sell it today you would lose (90.00) from holding NMDC Limited or give up 1.3% of portfolio value over 90 days.

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

NMDC Limited  vs.  Genus Paper Boards

NMDC Limited

Risk-Adjusted Performance

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 comparatively stable basic indicators, NMDC is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Genus Paper Boards

Risk-Adjusted Performance

Very Weak

Over the last 90 days Genus Paper Boards 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 basic 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 NMDC and Genus Paper

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

The idea behind NMDC Limited and Genus Paper Boards 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.