Correlation Between Ortel Communications and RBL Bank

Can any of the company-specific risk be diversified away by investing in both Ortel Communications and RBL Bank 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 Ortel Communications and RBL Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ortel Communications Limited and RBL Bank Limited, you can compare the effects of market volatilities on Ortel Communications and RBL Bank 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 Ortel Communications with a short position of RBL Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ortel Communications and RBL Bank.

Diversification Opportunities for Ortel Communications and RBL Bank

0.79

Correlation Coefficient

Ortel Communications  RBL Bank

Poor diversification

The 3 months correlation between Ortel and RBL is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Ortel Communications Limited and RBL Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBL Bank Limited and Ortel Communications 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 Ortel Communications Limited are associated (or correlated) with RBL Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBL Bank Limited has no effect on the direction of Ortel Communications i.e., Ortel Communications and RBL Bank go up and down completely randomly.

Pair Corralation between Ortel Communications and RBL Bank

Assuming the 90 days trading horizon Ortel Communications is expected to generate 1.52 times less return on investment than RBL Bank. In addition to that, Ortel Communications is 1.03 times more volatile than RBL Bank Limited. It trades about 0.13 of its total potential returns per unit of risk. RBL Bank Limited is currently generating about 0.21 per unit of volatility. If you would invest  18,809  in RBL Bank Limited on April 25, 2025 and sell it today you would earn a total of  7,083  from holding RBL Bank Limited or generate 37.66% return on investment over 90 days.

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

Ortel Communications Limited  vs.  RBL Bank Limited

Ortel Communications

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ortel Communications Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Ortel Communications displayed solid returns over the last few months and may actually be approaching a breakup point.

RBL Bank Limited

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in RBL Bank Limited are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, RBL Bank disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ortel Communications and RBL Bank

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

The idea behind Ortel Communications Limited and RBL Bank 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.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.