Correlation Between JSW Holdings and Gujarat Lease
Can any of the company-specific risk be diversified away by investing in both JSW Holdings and Gujarat Lease 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 JSW Holdings and Gujarat Lease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JSW Holdings Limited and Gujarat Lease Financing, you can compare the effects of market volatilities on JSW Holdings and Gujarat Lease 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 JSW Holdings with a short position of Gujarat Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of JSW Holdings and Gujarat Lease.
Diversification Opportunities for JSW Holdings and Gujarat Lease
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between JSW and Gujarat is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding JSW Holdings Limited and Gujarat Lease Financing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gujarat Lease Financing and JSW Holdings 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 JSW Holdings Limited are associated (or correlated) with Gujarat Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gujarat Lease Financing has no effect on the direction of JSW Holdings i.e., JSW Holdings and Gujarat Lease go up and down completely randomly.
Pair Corralation between JSW Holdings and Gujarat Lease
Assuming the 90 days trading horizon JSW Holdings Limited is expected to generate 0.94 times more return on investment than Gujarat Lease. However, JSW Holdings Limited is 1.06 times less risky than Gujarat Lease. It trades about 0.1 of its potential returns per unit of risk. Gujarat Lease Financing is currently generating about 0.08 per unit of risk. If you would invest 426,560 in JSW Holdings Limited on September 5, 2024 and sell it today you would earn a total of 1,018,555 from holding JSW Holdings Limited or generate 238.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
JSW Holdings Limited vs. Gujarat Lease Financing
Performance |
| Timeline |
| JSW Holdings Limited |
| Gujarat Lease Financing |
JSW Holdings and Gujarat Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JSW Holdings and Gujarat Lease
The main advantage of trading using opposite JSW Holdings and Gujarat Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JSW Holdings position performs unexpectedly, Gujarat Lease 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 Gujarat Lease will offset losses from the drop in Gujarat Lease's long position.| JSW Holdings vs. Shivalik Bimetal Controls | JSW Holdings vs. Alkali Metals Limited | JSW Holdings vs. LLOYDS METALS AND | JSW Holdings vs. Ankit Metal Power |
| Gujarat Lease vs. MRF Limited | Gujarat Lease vs. JSW Holdings Limited | Gujarat Lease vs. Maharashtra Scooters Limited | Gujarat Lease vs. Vardhman Holdings 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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