Correlation Between NRB Industrial and MIC Electronics
Can any of the company-specific risk be diversified away by investing in both NRB Industrial and MIC Electronics 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 MIC Electronics 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 MIC Electronics Limited, you can compare the effects of market volatilities on NRB Industrial and MIC Electronics 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 MIC Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of NRB Industrial and MIC Electronics.
Diversification Opportunities for NRB Industrial and MIC Electronics
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NRB and MIC is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding NRB Industrial Bearings and MIC Electronics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MIC Electronics 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 MIC Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MIC Electronics has no effect on the direction of NRB Industrial i.e., NRB Industrial and MIC Electronics go up and down completely randomly.
Pair Corralation between NRB Industrial and MIC Electronics
Assuming the 90 days trading horizon NRB Industrial Bearings is expected to generate 0.84 times more return on investment than MIC Electronics. However, NRB Industrial Bearings is 1.19 times less risky than MIC Electronics. It trades about -0.02 of its potential returns per unit of risk. MIC Electronics Limited is currently generating about -0.03 per unit of risk. If you would invest 2,404 in NRB Industrial Bearings on November 5, 2024 and sell it today you would lose (44.00) from holding NRB Industrial Bearings or give up 1.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NRB Industrial Bearings vs. MIC Electronics Limited
Performance |
| Timeline |
| NRB Industrial Bearings |
| MIC Electronics |
NRB Industrial and MIC Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NRB Industrial and MIC Electronics
The main advantage of trading using opposite NRB Industrial and MIC Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NRB Industrial position performs unexpectedly, MIC Electronics 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 MIC Electronics will offset losses from the drop in MIC Electronics' long position.| NRB Industrial vs. Gangotri Textiles Limited | NRB Industrial vs. Hemisphere Properties India | NRB Industrial vs. Kingfa Science Technology | NRB Industrial vs. Rico Auto Industries |
| MIC Electronics vs. LLOYDS METALS AND | MIC Electronics vs. Ankit Metal Power | MIC Electronics vs. Alkali Metals Limited | MIC Electronics vs. Shree Pushkar Chemicals |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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