Correlation Between Jindal Stainless and Pilani Investment

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

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

Diversification Opportunities for Jindal Stainless and Pilani Investment

-0.66

Correlation Coefficient

Jindal Stainless  Pilani Investment

Excellent diversification

The 3 months correlation between Jindal and Pilani is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Jindal Stainless Limited and Pilani Investment and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pilani Investment and Jindal Stainless 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 Jindal Stainless Limited are associated (or correlated) with Pilani Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pilani Investment has no effect on the direction of Jindal Stainless i.e., Jindal Stainless and Pilani Investment go up and down completely randomly.

Pair Corralation between Jindal Stainless and Pilani Investment

Assuming the 90 days trading horizon Jindal Stainless Limited is expected to under-perform the Pilani Investment. But the stock apears to be less risky and, when comparing its historical volatility, Jindal Stainless Limited is 2.16 times less risky than Pilani Investment. The stock trades about -0.04 of its potential returns per unit of risk. The Pilani Investment and is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  554,290  in Pilani Investment and on September 26, 2024 and sell it today you would lose (2,075) from holding Pilani Investment and or give up 0.37% of portfolio value over 90 days.

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

Jindal Stainless Limited  vs.  Pilani Investment and

Jindal Stainless

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jindal Stainless Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Jindal Stainless is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pilani Investment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pilani Investment and are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Pilani Investment is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Jindal Stainless and Pilani Investment

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

The idea behind Jindal Stainless Limited and Pilani Investment and 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.