Correlation Between Vibhor Steel and Nazara Technologies

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

By analyzing existing cross correlation between Vibhor Steel Tubes and Nazara Technologies Limited, you can compare the effects of market volatilities on Vibhor Steel and Nazara Technologies 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 Vibhor Steel with a short position of Nazara Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vibhor Steel and Nazara Technologies.

Diversification Opportunities for Vibhor Steel and Nazara Technologies

-0.44

Correlation Coefficient

Vibhor Steel  Nazara Technologies

Very good diversification

The 3 months correlation between Vibhor and Nazara is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Vibhor Steel Tubes and Nazara Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nazara Technologies and Vibhor Steel 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 Vibhor Steel Tubes are associated (or correlated) with Nazara Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nazara Technologies has no effect on the direction of Vibhor Steel i.e., Vibhor Steel and Nazara Technologies go up and down completely randomly.

Pair Corralation between Vibhor Steel and Nazara Technologies

Assuming the 90 days trading horizon Vibhor Steel Tubes is expected to under-perform the Nazara Technologies. In addition to that, Vibhor Steel is 1.22 times more volatile than Nazara Technologies Limited. It trades about -0.14 of its total potential returns per unit of risk. Nazara Technologies Limited is currently generating about 0.03 per unit of volatility. If you would invest  93,015  in Nazara Technologies Limited on October 13, 2024 and sell it today you would earn a total of  2,880  from holding Nazara Technologies Limited or generate 3.1% return on investment over 90 days.

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

Vibhor Steel Tubes  vs.  Nazara Technologies Limited

Vibhor Steel Tubes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vibhor Steel Tubes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain 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.

Nazara Technologies

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nazara Technologies Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Nazara Technologies is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vibhor Steel and Nazara Technologies

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

The idea behind Vibhor Steel Tubes and Nazara Technologies 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.