Correlation Between Renuka Agri and Nations Trust

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

By analyzing existing cross correlation between Renuka Agri Foods and Nations Trust Bank, you can compare the effects of market volatilities on Renuka Agri and Nations Trust 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 Renuka Agri with a short position of Nations Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Renuka Agri and Nations Trust.

Diversification Opportunities for Renuka Agri and Nations Trust

0.73

Correlation Coefficient

Renuka Agri  Nations Trust

Poor diversification

The 3 months correlation between Renuka and Nations is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Renuka Agri Foods and Nations Trust Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nations Trust Bank and Renuka Agri 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 Renuka Agri Foods are associated (or correlated) with Nations Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nations Trust Bank has no effect on the direction of Renuka Agri i.e., Renuka Agri and Nations Trust go up and down completely randomly.

Pair Corralation between Renuka Agri and Nations Trust

Assuming the 90 days trading horizon Renuka Agri is expected to generate 3.59 times less return on investment than Nations Trust. In addition to that, Renuka Agri is 1.63 times more volatile than Nations Trust Bank. It trades about 0.05 of its total potential returns per unit of risk. Nations Trust Bank is currently generating about 0.28 per unit of volatility. If you would invest  15,175  in Nations Trust Bank on December 3, 2024 and sell it today you would earn a total of  4,900  from holding Nations Trust Bank or generate 32.29% return on investment over 90 days.

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

Renuka Agri Foods  vs.  Nations Trust Bank

Renuka Agri Foods

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Renuka Agri Foods are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Renuka Agri may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Nations Trust Bank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nations Trust Bank are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nations Trust sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Renuka Agri and Nations Trust

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

The idea behind Renuka Agri Foods and Nations Trust Bank 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.

Check out your portfolio center.

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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.