Correlation Between Pilani Investment and Jindal Stainless

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

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

Diversification Opportunities for Pilani Investment and Jindal Stainless

-0.66

Correlation Coefficient

Pilani Investment  Jindal Stainless

Excellent diversification

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

Pair Corralation between Pilani Investment and Jindal Stainless

Assuming the 90 days trading horizon Pilani Investment and is expected to generate 2.14 times more return on investment than Jindal Stainless. However, Pilani Investment is 2.14 times more volatile than Jindal Stainless Limited. It trades about 0.02 of its potential returns per unit of risk. Jindal Stainless Limited is currently generating about -0.04 per unit of risk. If you would invest  553,825  in Pilani Investment and on September 27, 2024 and sell it today you would lose (1,610) from holding Pilani Investment and or give up 0.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Pilani Investment and  vs.  Jindal Stainless Limited

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.

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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Pilani Investment and Jindal Stainless

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

The idea behind Pilani Investment and and Jindal Stainless 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.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.