Correlation Between GTL and NRB Industrial
Can any of the company-specific risk be diversified away by investing in both GTL 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 GTL and NRB Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GTL Limited and NRB Industrial Bearings, you can compare the effects of market volatilities on GTL 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 GTL with a short position of NRB Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of GTL and NRB Industrial.
Diversification Opportunities for GTL and NRB Industrial
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GTL and NRB is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding GTL 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 GTL 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 GTL 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 GTL i.e., GTL and NRB Industrial go up and down completely randomly.
Pair Corralation between GTL and NRB Industrial
Assuming the 90 days trading horizon GTL Limited is expected to generate 1.36 times more return on investment than NRB Industrial. However, GTL is 1.36 times more volatile than NRB Industrial Bearings. It trades about -0.01 of its potential returns per unit of risk. NRB Industrial Bearings is currently generating about -0.02 per unit of risk. If you would invest 1,306 in GTL Limited on September 2, 2024 and sell it today you would lose (19.00) from holding GTL Limited or give up 1.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GTL Limited vs. NRB Industrial Bearings
Performance |
| Timeline |
| GTL Limited |
| NRB Industrial Bearings |
GTL and NRB Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GTL and NRB Industrial
The main advantage of trading using opposite GTL and NRB Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GTL 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.| GTL vs. One 97 Communications | GTL vs. Paramount Communications Limited | GTL vs. OnMobile Global Limited | GTL vs. Elin Electronics Limited |
| NRB Industrial vs. State Bank of | NRB Industrial vs. Life Insurance | NRB Industrial vs. HDFC Bank Limited | NRB Industrial vs. ICICI Bank Limited |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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