Correlation Between Welspun Corp and Jindal Poly

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

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

Diversification Opportunities for Welspun Corp and Jindal Poly

0.33

Correlation Coefficient

Welspun Corp  Jindal Poly

Weak diversification

The 3 months correlation between Welspun and Jindal is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Welspun Corp 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 Welspun Corp 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 Welspun Corp 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 Welspun Corp i.e., Welspun Corp and Jindal Poly go up and down completely randomly.

Pair Corralation between Welspun Corp and Jindal Poly

Assuming the 90 days trading horizon Welspun Corp is expected to generate 1.33 times less return on investment than Jindal Poly. But when comparing it to its historical volatility, Welspun Corp Limited is 1.61 times less risky than Jindal Poly. It trades about 0.09 of its potential returns per unit of risk. Jindal Poly Investment is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  81,525  in Jindal Poly Investment on September 21, 2024 and sell it today you would earn a total of  12,035  from holding Jindal Poly Investment or generate 14.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Welspun Corp Limited  vs.  Jindal Poly Investment

Welspun Corp Limited

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Welspun Corp Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Welspun Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Jindal Poly Investment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jindal Poly Investment are ranked lower than 6 (%) 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 Welspun Corp and Jindal Poly

The main advantage of trading using opposite Welspun Corp and Jindal Poly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Welspun Corp 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 Welspun Corp 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.