Correlation Between V2 Retail and NRB Industrial

Can any of the company-specific risk be diversified away by investing in both V2 Retail 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 V2 Retail and NRB Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between V2 Retail Limited and NRB Industrial Bearings, you can compare the effects of market volatilities on V2 Retail 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 V2 Retail with a short position of NRB Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of V2 Retail and NRB Industrial.

Diversification Opportunities for V2 Retail and NRB Industrial

-0.67

Correlation Coefficient

V2 Retail  NRB Industrial

Excellent diversification

The 3 months correlation between V2RETAIL and NRB is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding V2 Retail Limited 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 V2 Retail 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 V2 Retail Limited 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 V2 Retail i.e., V2 Retail and NRB Industrial go up and down completely randomly.

Pair Corralation between V2 Retail and NRB Industrial

Assuming the 90 days trading horizon V2 Retail Limited is expected to generate 1.02 times more return on investment than NRB Industrial. However, V2 Retail is 1.02 times more volatile than NRB Industrial Bearings. It trades about 0.31 of its potential returns per unit of risk. NRB Industrial Bearings is currently generating about -0.21 per unit of risk. If you would invest  162,160  in V2 Retail Limited on October 20, 2024 and sell it today you would earn a total of  26,940  from holding V2 Retail Limited or generate 16.61% return on investment over 90 days.

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

V2 Retail Limited  vs.  NRB Industrial Bearings

V2 Retail Limited

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in V2 Retail Limited are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, V2 Retail demonstrated solid returns over the last few months and may actually be approaching a breakup point.

NRB Industrial Bearings

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with V2 Retail and NRB Industrial

The main advantage of trading using opposite V2 Retail and NRB Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if V2 Retail 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 V2 Retail Limited 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.