Correlation Between Tube Investments and NRB Industrial

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

By analyzing existing cross correlation between Tube Investments of and NRB Industrial Bearings, you can compare the effects of market volatilities on Tube Investments and NRB Industrial 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 Tube Investments with a short position of NRB Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tube Investments and NRB Industrial.

Diversification Opportunities for Tube Investments and NRB Industrial

0.37

Correlation Coefficient

Tube Investments  NRB Industrial

Weak diversification

The 3 months correlation between Tube and NRB is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Tube Investments of and NRB Industrial Bearings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRB Industrial Bearings and Tube Investments 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 Tube Investments of are associated (or correlated) with NRB Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NRB Industrial Bearings has no effect on the direction of Tube Investments i.e., Tube Investments and NRB Industrial go up and down completely randomly.

Pair Corralation between Tube Investments and NRB Industrial

Assuming the 90 days trading horizon Tube Investments of is expected to under-perform the NRB Industrial. In addition to that, Tube Investments is 1.02 times more volatile than NRB Industrial Bearings. It trades about -0.12 of its total potential returns per unit of risk. NRB Industrial Bearings is currently generating about 0.0 per unit of volatility. If you would invest  2,493  in NRB Industrial Bearings on December 21, 2024 and sell it today you would lose (46.00) from holding NRB Industrial Bearings or give up 1.85% of portfolio value over 90 days.

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

Tube Investments of  vs.  NRB Industrial Bearings

Tube Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tube Investments of 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 fundamental 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.

NRB Industrial Bearings

Risk-Adjusted Performance

Very Weak

Over the last 90 days NRB Industrial Bearings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, NRB Industrial is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Tube Investments and NRB Industrial

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

The idea behind Tube Investments of and NRB Industrial Bearings 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.