Correlation Between Jindal Stainless and Steel Authority
Can any of the company-specific risk be diversified away by investing in both Jindal Stainless and Steel Authority 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 Jindal Stainless and Steel Authority into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jindal Stainless Limited and Steel Authority of, you can compare the effects of market volatilities on Jindal Stainless 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 Stainless with a short position of Steel Authority. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jindal Stainless and Steel Authority.
Diversification Opportunities for Jindal Stainless and Steel Authority
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Jindal and Steel is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Jindal Stainless Limited 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 Stainless 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 Stainless Limited 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 Stainless i.e., Jindal Stainless and Steel Authority go up and down completely randomly.
Pair Corralation between Jindal Stainless and Steel Authority
Assuming the 90 days trading horizon Jindal Stainless is expected to generate 1.44 times less return on investment than Steel Authority. In addition to that, Jindal Stainless is 1.53 times more volatile than Steel Authority of. It trades about 0.2 of its total potential returns per unit of risk. Steel Authority of is currently generating about 0.45 per unit of volatility. If you would invest 11,417 in Steel Authority of on September 13, 2024 and sell it today you would earn a total of 1,278 from holding Steel Authority of or generate 11.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jindal Stainless Limited vs. Steel Authority of
Performance |
| Timeline |
| Jindal Stainless |
| Steel Authority |
Jindal Stainless and Steel Authority Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jindal Stainless and Steel Authority
The main advantage of trading using opposite Jindal Stainless and Steel Authority positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jindal Stainless 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.| Jindal Stainless vs. NMDC Limited | Jindal Stainless vs. Steel Authority of | Jindal Stainless vs. Embassy Office Parks | Jindal Stainless vs. Gujarat Narmada Valley |
| Steel Authority vs. NMDC Limited | Steel Authority vs. Embassy Office Parks | Steel Authority vs. Gujarat Narmada Valley | Steel Authority vs. Gujarat Alkalies and |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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