Correlation Between V Mart and Jindal Poly

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

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

Diversification Opportunities for V Mart and Jindal Poly

-0.58

Correlation Coefficient

V Mart  Jindal Poly

Excellent diversification

The 3 months correlation between VMART and Jindal is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding V Mart Retail 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 V Mart 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 V Mart Retail 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 V Mart i.e., V Mart and Jindal Poly go up and down completely randomly.

Pair Corralation between V Mart and Jindal Poly

Assuming the 90 days trading horizon V Mart is expected to generate 1.11 times less return on investment than Jindal Poly. But when comparing it to its historical volatility, V Mart Retail Limited is 1.17 times less risky than Jindal Poly. It trades about 0.06 of its potential returns per unit of risk. Jindal Poly Investment is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  84,620  in Jindal Poly Investment on August 31, 2024 and sell it today you would earn a total of  7,385  from holding Jindal Poly Investment or generate 8.73% return on investment over 90 days.

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

V Mart Retail Limited  vs.  Jindal Poly Investment

V Mart Retail

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in V Mart Retail Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, V Mart may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Jindal Poly Investment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jindal Poly Investment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Jindal Poly may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with V Mart and Jindal Poly

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

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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 Transaction History module to view history of all your transactions and understand their impact on performance.