Correlation Between Kaushalya Infrastructure and Jindal Poly

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

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

Diversification Opportunities for Kaushalya Infrastructure and Jindal Poly

0.5

Correlation Coefficient

Kaushalya Infrastructure  Jindal Poly

Very weak diversification

The 3 months correlation between Kaushalya and Jindal is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Kaushalya Infrastructure Devel 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 Kaushalya Infrastructure 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 Kaushalya Infrastructure Development 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 Kaushalya Infrastructure i.e., Kaushalya Infrastructure and Jindal Poly go up and down completely randomly.

Pair Corralation between Kaushalya Infrastructure and Jindal Poly

Assuming the 90 days trading horizon Kaushalya Infrastructure is expected to generate 10.86 times less return on investment than Jindal Poly. But when comparing it to its historical volatility, Kaushalya Infrastructure Development is 1.9 times less risky than Jindal Poly. It trades about 0.01 of its potential returns per unit of risk. Jindal Poly Investment is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  80,690  in Jindal Poly Investment on September 25, 2024 and sell it today you would earn a total of  9,650  from holding Jindal Poly Investment or generate 11.96% return on investment over 90 days.

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

Kaushalya Infrastructure Devel  vs.  Jindal Poly Investment

Kaushalya Infrastructure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kaushalya Infrastructure Development has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Kaushalya Infrastructure is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

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 conflicting basic indicators, Jindal Poly displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kaushalya Infrastructure and Jindal Poly

The main advantage of trading using opposite Kaushalya Infrastructure and Jindal Poly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaushalya Infrastructure 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 Kaushalya Infrastructure Development 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.

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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.