Correlation Between Jindal Steel and Steel Authority
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By analyzing existing cross correlation between Jindal Steel Power and Steel Authority of, you can compare the effects of market volatilities on Jindal Steel and Steel Authority 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 Jindal Steel with a short position of Steel Authority. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jindal Steel and Steel Authority.
Diversification Opportunities for Jindal Steel and Steel Authority
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Jindal and Steel is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Jindal Steel Power and Steel Authority of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Authority and Jindal Steel 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 Jindal Steel Power are associated (or correlated) with Steel Authority. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Authority has no effect on the direction of Jindal Steel i.e., Jindal Steel and Steel Authority go up and down completely randomly.
Pair Corralation between Jindal Steel and Steel Authority
Assuming the 90 days trading horizon Jindal Steel Power is expected to generate 0.62 times more return on investment than Steel Authority. However, Jindal Steel Power is 1.61 times less risky than Steel Authority. It trades about -0.06 of its potential returns per unit of risk. Steel Authority of is currently generating about -0.08 per unit of risk. If you would invest 105,459 in Jindal Steel Power on August 30, 2024 and sell it today you would lose (15,759) from holding Jindal Steel Power or give up 14.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.19% |
| Values | Daily Returns |
Jindal Steel Power vs. Steel Authority of
Performance |
| Timeline |
| Jindal Steel Power |
| Steel Authority |
Jindal Steel and Steel Authority Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jindal Steel and Steel Authority
The main advantage of trading using opposite Jindal Steel and Steel Authority positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jindal Steel position performs unexpectedly, Steel Authority 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 Steel Authority will offset losses from the drop in Steel Authority's long position.The idea behind Jindal Steel Power and Steel Authority of 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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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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