Correlation Between NRB Industrial and GTL
Can any of the company-specific risk be diversified away by investing in both NRB Industrial and GTL 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 NRB Industrial and GTL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NRB Industrial Bearings and GTL Limited, you can compare the effects of market volatilities on NRB Industrial and GTL 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 NRB Industrial with a short position of GTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of NRB Industrial and GTL.
Diversification Opportunities for NRB Industrial and GTL
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NRB and GTL is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding NRB Industrial Bearings and GTL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GTL Limited and NRB Industrial 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 NRB Industrial Bearings are associated (or correlated) with GTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GTL Limited has no effect on the direction of NRB Industrial i.e., NRB Industrial and GTL go up and down completely randomly.
Pair Corralation between NRB Industrial and GTL
Assuming the 90 days trading horizon NRB Industrial Bearings is expected to under-perform the GTL. But the stock apears to be less risky and, when comparing its historical volatility, NRB Industrial Bearings is 2.1 times less risky than GTL. The stock trades about -0.09 of its potential returns per unit of risk. The GTL Limited is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,194 in GTL Limited on September 14, 2024 and sell it today you would earn a total of 166.00 from holding GTL Limited or generate 13.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NRB Industrial Bearings vs. GTL Limited
Performance |
| Timeline |
| NRB Industrial Bearings |
| GTL Limited |
NRB Industrial and GTL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NRB Industrial and GTL
The main advantage of trading using opposite NRB Industrial and GTL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NRB Industrial position performs unexpectedly, GTL 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 GTL will offset losses from the drop in GTL's long position.| NRB Industrial vs. Kingfa Science Technology | NRB Industrial vs. Rico Auto Industries | NRB Industrial vs. GACM Technologies Limited | NRB Industrial vs. COSMO FIRST LIMITED |
| GTL vs. Lakshmi Finance Industrial | GTL vs. Rajnandini Metal Limited | GTL vs. NRB Industrial Bearings | GTL vs. Indian Metals Ferro |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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