Correlation Between JSW Holdings and Jindal Poly

Can any of the company-specific risk be diversified away by investing in both JSW Holdings and Jindal Poly 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 Jindal Poly 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 Jindal Poly Investment, you can compare the effects of market volatilities on JSW Holdings and Jindal Poly 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 Jindal Poly. Check out your portfolio center. Please also check ongoing floating volatility patterns of JSW Holdings and Jindal Poly.

Diversification Opportunities for JSW Holdings and Jindal Poly

0.65

Correlation Coefficient

JSW Holdings  Jindal Poly

Poor diversification

The 3 months correlation between JSW and Jindal is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding JSW Holdings Limited and Jindal Poly Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jindal Poly Investment 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 Jindal Poly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jindal Poly Investment has no effect on the direction of JSW Holdings i.e., JSW Holdings and Jindal Poly go up and down completely randomly.

Pair Corralation between JSW Holdings and Jindal Poly

Assuming the 90 days trading horizon JSW Holdings Limited is expected to generate 1.46 times more return on investment than Jindal Poly. However, JSW Holdings is 1.46 times more volatile than Jindal Poly Investment. It trades about 0.21 of its potential returns per unit of risk. Jindal Poly Investment is currently generating about 0.07 per unit of risk. If you would invest  784,005  in JSW Holdings Limited on September 13, 2024 and sell it today you would earn a total of  666,765  from holding JSW Holdings Limited or generate 85.05% 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.  Jindal Poly Investment

JSW Holdings Limited

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JSW Holdings Limited are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, JSW Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Jindal Poly Investment

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jindal Poly Investment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Jindal Poly displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JSW Holdings and Jindal Poly

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

The idea behind JSW Holdings Limited and Jindal Poly Investment 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .