Correlation Between Multi Commodity and NRB Industrial

Can any of the company-specific risk be diversified away by investing in both Multi Commodity and NRB Industrial 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 Multi Commodity and NRB Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Multi Commodity Exchange and NRB Industrial Bearings, you can compare the effects of market volatilities on Multi Commodity and NRB Industrial 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 Multi Commodity with a short position of NRB Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Commodity and NRB Industrial.

Diversification Opportunities for Multi Commodity and NRB Industrial

0.59

Correlation Coefficient

Multi Commodity  NRB Industrial

Very weak diversification

The 3 months correlation between Multi and NRB is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Multi Commodity Exchange and NRB Industrial Bearings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRB Industrial Bearings and Multi Commodity 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 Multi Commodity Exchange are associated (or correlated) with NRB Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NRB Industrial Bearings has no effect on the direction of Multi Commodity i.e., Multi Commodity and NRB Industrial go up and down completely randomly.

Pair Corralation between Multi Commodity and NRB Industrial

Assuming the 90 days trading horizon Multi Commodity Exchange is expected to generate 0.52 times more return on investment than NRB Industrial. However, Multi Commodity Exchange is 1.93 times less risky than NRB Industrial. It trades about 0.19 of its potential returns per unit of risk. NRB Industrial Bearings is currently generating about 0.07 per unit of risk. If you would invest  622,500  in Multi Commodity Exchange on April 24, 2025 and sell it today you would earn a total of  192,850  from holding Multi Commodity Exchange or generate 30.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Multi Commodity Exchange  vs.  NRB Industrial Bearings

Multi Commodity Exchange

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Commodity Exchange are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Multi Commodity exhibited solid returns over the last few months and may actually be approaching a breakup point.

NRB Industrial Bearings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NRB Industrial Bearings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, NRB Industrial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Multi Commodity and NRB Industrial

The main advantage of trading using opposite Multi Commodity and NRB Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi Commodity position performs unexpectedly, NRB Industrial 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 NRB Industrial will offset losses from the drop in NRB Industrial's long position.

The idea behind Multi Commodity Exchange and NRB Industrial Bearings 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.

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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.