Correlation Between Vibhor Steel and Niraj Ispat

Can any of the company-specific risk be diversified away by investing in both Vibhor Steel and Niraj Ispat 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 Niraj Ispat 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 Niraj Ispat Industries, you can compare the effects of market volatilities on Vibhor Steel and Niraj Ispat 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 Niraj Ispat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vibhor Steel and Niraj Ispat.

Diversification Opportunities for Vibhor Steel and Niraj Ispat

-0.4

Correlation Coefficient

Vibhor Steel  Niraj Ispat

Very good diversification

The 3 months correlation between Vibhor and Niraj is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Vibhor Steel Tubes and Niraj Ispat Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Niraj Ispat Industries 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 Niraj Ispat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Niraj Ispat Industries has no effect on the direction of Vibhor Steel i.e., Vibhor Steel and Niraj Ispat go up and down completely randomly.

Pair Corralation between Vibhor Steel and Niraj Ispat

Assuming the 90 days trading horizon Vibhor Steel Tubes is expected to under-perform the Niraj Ispat. But the stock apears to be less risky and, when comparing its historical volatility, Vibhor Steel Tubes is 1.0 times less risky than Niraj Ispat. The stock trades about -0.1 of its potential returns per unit of risk. The Niraj Ispat Industries is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  11,200  in Niraj Ispat Industries on September 29, 2024 and sell it today you would earn a total of  13,318  from holding Niraj Ispat Industries or generate 118.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	44.01%
Values	Daily Returns

Vibhor Steel Tubes  vs.  Niraj Ispat Industries

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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Niraj Ispat Industries

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Niraj Ispat Industries are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Niraj Ispat unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vibhor Steel and Niraj Ispat

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

The idea behind Vibhor Steel Tubes and Niraj Ispat Industries 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.