Correlation Between SAL Steel and NMDC
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By analyzing existing cross correlation between SAL Steel Limited and NMDC Limited, you can compare the effects of market volatilities on SAL Steel and NMDC 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 SAL Steel with a short position of NMDC. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAL Steel and NMDC.
Diversification Opportunities for SAL Steel and NMDC
Modest diversification
The 3 months correlation between SAL and NMDC is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding SAL Steel Limited and NMDC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMDC Limited and SAL 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 SAL Steel Limited are associated (or correlated) with NMDC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NMDC Limited has no effect on the direction of SAL Steel i.e., SAL Steel and NMDC go up and down completely randomly.
Pair Corralation between SAL Steel and NMDC
Assuming the 90 days trading horizon SAL Steel Limited is expected to under-perform the NMDC. In addition to that, SAL Steel is 1.68 times more volatile than NMDC Limited. It trades about -0.04 of its total potential returns per unit of risk. NMDC Limited is currently generating about 0.03 per unit of volatility. If you would invest 22,614 in NMDC Limited on August 30, 2024 and sell it today you would earn a total of 158.00 from holding NMDC Limited or generate 0.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
SAL Steel Limited vs. NMDC Limited
Performance |
| Timeline |
| SAL Steel Limited |
| NMDC Limited |
SAL Steel and NMDC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SAL Steel and NMDC
The main advantage of trading using opposite SAL Steel and NMDC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAL Steel position performs unexpectedly, NMDC 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 NMDC will offset losses from the drop in NMDC's long position.The idea behind SAL Steel Limited and NMDC Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| NMDC vs. Bodhi Tree Multimedia | NMDC vs. Sudarshan Chemical Industries | NMDC vs. Tata Chemicals Limited | NMDC vs. Next Mediaworks 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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