Correlation Between Coal India and Jindal Steel
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By analyzing existing cross correlation between Coal India Limited and Jindal Steel Power, you can compare the effects of market volatilities on Coal India and Jindal Steel 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 Coal India with a short position of Jindal Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coal India and Jindal Steel.
Diversification Opportunities for Coal India and Jindal Steel
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Coal and Jindal is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Coal India Limited and Jindal Steel Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jindal Steel Power and Coal India 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 Coal India Limited are associated (or correlated) with Jindal Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jindal Steel Power has no effect on the direction of Coal India i.e., Coal India and Jindal Steel go up and down completely randomly.
Pair Corralation between Coal India and Jindal Steel
Assuming the 90 days trading horizon Coal India Limited is expected to generate 1.1 times more return on investment than Jindal Steel. However, Coal India is 1.1 times more volatile than Jindal Steel Power. It trades about 0.1 of its potential returns per unit of risk. Jindal Steel Power is currently generating about 0.06 per unit of risk. If you would invest 20,669 in Coal India Limited on August 30, 2024 and sell it today you would earn a total of 21,046 from holding Coal India Limited or generate 101.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.49% |
| Values | Daily Returns |
Coal India Limited vs. Jindal Steel Power
Performance |
| Timeline |
| Coal India Limited |
| Jindal Steel Power |
Coal India and Jindal Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coal India and Jindal Steel
The main advantage of trading using opposite Coal India and Jindal Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coal India position performs unexpectedly, Jindal Steel 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 Steel will offset losses from the drop in Jindal Steel's long position.| Coal India vs. India Glycols Limited | Coal India vs. Indo Borax Chemicals | Coal India vs. Kingfa Science Technology | Coal India vs. Alkali Metals Limited |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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