Correlation Between NMDC and India Glycols

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

By analyzing existing cross correlation between NMDC Limited and India Glycols Limited, you can compare the effects of market volatilities on NMDC and India Glycols 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 India Glycols. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMDC and India Glycols.

Diversification Opportunities for NMDC and India Glycols

0.36

Correlation Coefficient

NMDC  India Glycols

Weak diversification

The 3 months correlation between NMDC and India is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding NMDC Limited and India Glycols Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on India Glycols 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 India Glycols. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of India Glycols Limited has no effect on the direction of NMDC i.e., NMDC and India Glycols go up and down completely randomly.

Pair Corralation between NMDC and India Glycols

Assuming the 90 days trading horizon NMDC is expected to generate 1.84 times less return on investment than India Glycols. But when comparing it to its historical volatility, NMDC Limited is 1.36 times less risky than India Glycols. It trades about 0.06 of its potential returns per unit of risk. India Glycols Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  137,020  in India Glycols Limited on May 7, 2025 and sell it today you would earn a total of  37,690  from holding India Glycols Limited or generate 27.51% return on investment over 90 days.

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

NMDC Limited  vs.  India Glycols Limited

NMDC Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NMDC Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, NMDC may actually be approaching a critical reversion point that can send shares even higher in September 2025.

India Glycols Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in India Glycols Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, India Glycols disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NMDC and India Glycols

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

The idea behind NMDC Limited and India Glycols 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.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.