Correlation Between Grasim Industries and James Hardie

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

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

Diversification Opportunities for Grasim Industries and James Hardie

0.0

Correlation Coefficient

Grasim Industries  James Hardie

Pay attention - limited upside

The 3 months correlation between Grasim and James is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Grasim Industries Limited and James Hardie Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on James Hardie Industries and Grasim Industries 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 Grasim Industries Limited are associated (or correlated) with James Hardie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of James Hardie Industries has no effect on the direction of Grasim Industries i.e., Grasim Industries and James Hardie go up and down completely randomly.

Pair Corralation between Grasim Industries and James Hardie

If you would invest  1,961  in Grasim Industries Limited on September 14, 2024 and sell it today you would earn a total of  0.00  from holding Grasim Industries Limited or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Grasim Industries Limited  vs.  James Hardie Industries

Grasim Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grasim Industries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Grasim Industries is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

James Hardie Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days James Hardie Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, James Hardie is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Grasim Industries and James Hardie

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

The idea behind Grasim Industries Limited and James Hardie Industries 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.