Correlation Between JSW Steel and One 97

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Can any of the company-specific risk be diversified away by investing in both JSW Steel and One 97 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 Steel and One 97 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JSW Steel Limited and One 97 Communications, you can compare the effects of market volatilities on JSW Steel and One 97 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 Steel with a short position of One 97. Check out your portfolio center. Please also check ongoing floating volatility patterns of JSW Steel and One 97.

Diversification Opportunities for JSW Steel and One 97

-0.1
  Correlation Coefficient

Good diversification

The 3 months correlation between JSW and One is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding JSW Steel Limited and One 97 Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One 97 Communications and JSW 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 JSW Steel Limited are associated (or correlated) with One 97. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One 97 Communications has no effect on the direction of JSW Steel i.e., JSW Steel and One 97 go up and down completely randomly.

Pair Corralation between JSW Steel and One 97

Assuming the 90 days trading horizon JSW Steel Limited is expected to generate 0.41 times more return on investment than One 97. However, JSW Steel Limited is 2.44 times less risky than One 97. It trades about -0.09 of its potential returns per unit of risk. One 97 Communications is currently generating about -0.1 per unit of risk. If you would invest  96,600  in JSW Steel Limited on October 30, 2024 and sell it today you would lose (4,665) from holding JSW Steel Limited or give up 4.83% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy97.56%
ValuesDaily Returns

JSW Steel Limited  vs.  One 97 Communications

 Performance 
       Timeline  
JSW Steel Limited 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days JSW Steel Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, JSW Steel is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
One 97 Communications 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in One 97 Communications are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, One 97 may actually be approaching a critical reversion point that can send shares even higher in February 2025.

JSW Steel and One 97 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JSW Steel and One 97

The main advantage of trading using opposite JSW Steel and One 97 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JSW Steel position performs unexpectedly, One 97 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 One 97 will offset losses from the drop in One 97's long position.
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The idea behind JSW Steel Limited and One 97 Communications 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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