Correlation Between Himadri Speciality and Jindal Steel

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

By analyzing existing cross correlation between Himadri Speciality Chemical and Jindal Steel Power, you can compare the effects of market volatilities on Himadri Speciality and Jindal Steel 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 Himadri Speciality with a short position of Jindal Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Himadri Speciality and Jindal Steel.

Diversification Opportunities for Himadri Speciality and Jindal Steel

0.83

Correlation Coefficient

Himadri Speciality  Jindal Steel

Very poor diversification

The 3 months correlation between Himadri and Jindal is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Himadri Speciality Chemical and Jindal Steel Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jindal Steel Power and Himadri Speciality 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 Himadri Speciality Chemical are associated (or correlated) with Jindal Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jindal Steel Power has no effect on the direction of Himadri Speciality i.e., Himadri Speciality and Jindal Steel go up and down completely randomly.

Pair Corralation between Himadri Speciality and Jindal Steel

Assuming the 90 days trading horizon Himadri Speciality Chemical is expected to generate 1.57 times more return on investment than Jindal Steel. However, Himadri Speciality is 1.57 times more volatile than Jindal Steel Power. It trades about 0.02 of its potential returns per unit of risk. Jindal Steel Power is currently generating about -0.01 per unit of risk. If you would invest  53,790  in Himadri Speciality Chemical on September 5, 2024 and sell it today you would earn a total of  220.00  from holding Himadri Speciality Chemical or generate 0.41% return on investment over 90 days.

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

Himadri Speciality Chemical  vs.  Jindal Steel Power

Himadri Speciality

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Himadri Speciality Chemical are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Himadri Speciality is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Jindal Steel Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jindal Steel Power has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Jindal Steel is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Himadri Speciality and Jindal Steel

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

The idea behind Himadri Speciality Chemical and Jindal Steel Power 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.