Correlation Between JSW Holdings and MRF
Can any of the company-specific risk be diversified away by investing in both JSW Holdings and MRF 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 MRF 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 MRF Limited, you can compare the effects of market volatilities on JSW Holdings and MRF 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 MRF. Check out your portfolio center. Please also check ongoing floating volatility patterns of JSW Holdings and MRF.
Diversification Opportunities for JSW Holdings and MRF
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between JSW and MRF is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding JSW Holdings Limited and MRF Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MRF Limited 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 MRF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MRF Limited has no effect on the direction of JSW Holdings i.e., JSW Holdings and MRF go up and down completely randomly.
Pair Corralation between JSW Holdings and MRF
Assuming the 90 days trading horizon JSW Holdings Limited is expected to generate 6.2 times more return on investment than MRF. However, JSW Holdings is 6.2 times more volatile than MRF Limited. It trades about 0.27 of its potential returns per unit of risk. MRF Limited is currently generating about 0.04 per unit of risk. If you would invest 948,535 in JSW Holdings Limited on August 30, 2024 and sell it today you would earn a total of 439,865 from holding JSW Holdings Limited or generate 46.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JSW Holdings Limited vs. MRF Limited
Performance |
| Timeline |
| JSW Holdings Limited |
| MRF Limited |
JSW Holdings and MRF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JSW Holdings and MRF
The main advantage of trading using opposite JSW Holdings and MRF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JSW Holdings position performs unexpectedly, MRF 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 MRF will offset losses from the drop in MRF's long position.| JSW Holdings vs. Shree Pushkar Chemicals | JSW Holdings vs. Pondy Oxides Chemicals | JSW Holdings vs. Healthcare Global Enterprises | JSW Holdings vs. TECIL Chemicals and |
| MRF vs. V Mart Retail Limited | MRF vs. Ortel Communications Limited | MRF vs. Spencers Retail Limited | MRF vs. Silver Touch Technologies |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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