Correlation Between NMDC Steel and EIH Associated
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By analyzing existing cross correlation between NMDC Steel Limited and EIH Associated Hotels, you can compare the effects of market volatilities on NMDC Steel and EIH Associated 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 Steel with a short position of EIH Associated. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMDC Steel and EIH Associated.
Diversification Opportunities for NMDC Steel and EIH Associated
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NMDC and EIH is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding NMDC Steel Limited and EIH Associated Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EIH Associated Hotels and NMDC 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 NMDC Steel Limited are associated (or correlated) with EIH Associated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EIH Associated Hotels has no effect on the direction of NMDC Steel i.e., NMDC Steel and EIH Associated go up and down completely randomly.
Pair Corralation between NMDC Steel and EIH Associated
Assuming the 90 days trading horizon NMDC Steel is expected to generate 4.37 times less return on investment than EIH Associated. But when comparing it to its historical volatility, NMDC Steel Limited is 2.91 times less risky than EIH Associated. It trades about 0.03 of its potential returns per unit of risk. EIH Associated Hotels is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 19,873 in EIH Associated Hotels on November 2, 2024 and sell it today you would earn a total of 17,337 from holding EIH Associated Hotels or generate 87.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.97% |
| Values | Daily Returns |
NMDC Steel Limited vs. EIH Associated Hotels
Performance |
| Timeline |
| NMDC Steel Limited |
| EIH Associated Hotels |
NMDC Steel and EIH Associated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMDC Steel and EIH Associated
The main advantage of trading using opposite NMDC Steel and EIH Associated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMDC Steel position performs unexpectedly, EIH Associated 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 EIH Associated will offset losses from the drop in EIH Associated's long position.| NMDC Steel vs. Hindustan Copper Limited | NMDC Steel vs. ideaForge Technology Limited | NMDC Steel vs. Nucleus Software Exports | NMDC Steel vs. Home First Finance |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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