Correlation Between Jaypee Infratech and Indian Railway

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

By analyzing existing cross correlation between Jaypee Infratech Limited and Indian Railway Finance, you can compare the effects of market volatilities on Jaypee Infratech and Indian Railway 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 Jaypee Infratech with a short position of Indian Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jaypee Infratech and Indian Railway.

Diversification Opportunities for Jaypee Infratech and Indian Railway

0.0

Correlation Coefficient

Jaypee Infratech  Indian Railway

Pay attention - limited upside

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

Pair Corralation between Jaypee Infratech and Indian Railway

If you would invest  15,516  in Indian Railway Finance on September 19, 2024 and sell it today you would earn a total of  150.00  from holding Indian Railway Finance or generate 0.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Jaypee Infratech Limited  vs.  Indian Railway Finance

Jaypee Infratech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jaypee Infratech Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Jaypee Infratech is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Indian Railway Finance

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Jaypee Infratech and Indian Railway

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

The idea behind Jaypee Infratech Limited and Indian Railway Finance 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.