Correlation Between JSW Holdings and Choice International

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

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

Diversification Opportunities for JSW Holdings and Choice International

0.75

Correlation Coefficient

JSW Holdings  Choice International

Poor diversification

The 3 months correlation between JSW and Choice is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding JSW Holdings Limited and Choice International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choice International and JSW Holdings 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 JSW Holdings Limited are associated (or correlated) with Choice International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choice International has no effect on the direction of JSW Holdings i.e., JSW Holdings and Choice International go up and down completely randomly.

Pair Corralation between JSW Holdings and Choice International

Assuming the 90 days trading horizon JSW Holdings Limited is expected to generate 2.73 times more return on investment than Choice International. However, JSW Holdings is 2.73 times more volatile than Choice International Limited. It trades about 0.17 of its potential returns per unit of risk. Choice International Limited is currently generating about 0.13 per unit of risk. If you would invest  909,965  in JSW Holdings Limited on October 1, 2024 and sell it today you would earn a total of  544,750  from holding JSW Holdings Limited or generate 59.86% return on investment over 90 days.

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

JSW Holdings Limited  vs.  Choice International Limited

JSW Holdings Limited

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JSW Holdings Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, JSW Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Choice International

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Choice International Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical and fundamental indicators, Choice International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JSW Holdings and Choice International

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

The idea behind JSW Holdings Limited and Choice International 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.