Correlation Between NMDC and SAL Steel
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By analyzing existing cross correlation between NMDC Limited and SAL Steel Limited, you can compare the effects of market volatilities on NMDC and SAL Steel 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 NMDC with a short position of SAL Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMDC and SAL Steel.
Diversification Opportunities for NMDC and SAL Steel
Average diversification
The 3 months correlation between NMDC and SAL is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding NMDC Limited and SAL Steel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAL Steel Limited and NMDC 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 NMDC Limited are associated (or correlated) with SAL Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAL Steel Limited has no effect on the direction of NMDC i.e., NMDC and SAL Steel go up and down completely randomly.
Pair Corralation between NMDC and SAL Steel
Assuming the 90 days trading horizon NMDC Limited is expected to generate 8.81 times more return on investment than SAL Steel. However, NMDC is 8.81 times more volatile than SAL Steel Limited. It trades about 0.08 of its potential returns per unit of risk. SAL Steel Limited is currently generating about -0.08 per unit of risk. If you would invest 7,195 in NMDC Limited on October 24, 2024 and sell it today you would lose (565.00) from holding NMDC Limited or give up 7.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMDC Limited vs. SAL Steel Limited
Performance |
| Timeline |
| NMDC Limited |
| SAL Steel Limited |
NMDC and SAL Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMDC and SAL Steel
The main advantage of trading using opposite NMDC and SAL Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMDC position performs unexpectedly, SAL Steel 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 SAL Steel will offset losses from the drop in SAL Steel's long position.| NMDC vs. Foods Inns Limited | NMDC vs. Bharat Road Network | NMDC vs. Ami Organics Limited | NMDC vs. Parag Milk Foods |
| SAL Steel vs. NMDC Limited | SAL Steel vs. Steel Authority of | SAL Steel vs. Embassy Office Parks | SAL Steel vs. Jai Balaji Industries |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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