Correlation Between KIOCL and JSW Holdings
Can any of the company-specific risk be diversified away by investing in both KIOCL and JSW Holdings 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 KIOCL and JSW Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KIOCL Limited and JSW Holdings Limited, you can compare the effects of market volatilities on KIOCL and JSW Holdings 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 KIOCL with a short position of JSW Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of KIOCL and JSW Holdings.
Diversification Opportunities for KIOCL and JSW Holdings
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KIOCL and JSW is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding KIOCL Limited and JSW Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JSW Holdings Limited and KIOCL 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 KIOCL Limited are associated (or correlated) with JSW Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JSW Holdings Limited has no effect on the direction of KIOCL i.e., KIOCL and JSW Holdings go up and down completely randomly.
Pair Corralation between KIOCL and JSW Holdings
Assuming the 90 days trading horizon KIOCL is expected to generate 3.33 times less return on investment than JSW Holdings. But when comparing it to its historical volatility, KIOCL Limited is 1.43 times less risky than JSW Holdings. It trades about 0.12 of its potential returns per unit of risk. JSW Holdings Limited is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 964,850 in JSW Holdings Limited on September 1, 2024 and sell it today you would earn a total of 449,645 from holding JSW Holdings Limited or generate 46.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
KIOCL Limited vs. JSW Holdings Limited
Performance |
| Timeline |
| KIOCL Limited |
| JSW Holdings Limited |
KIOCL and JSW Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KIOCL and JSW Holdings
The main advantage of trading using opposite KIOCL and JSW Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KIOCL position performs unexpectedly, JSW Holdings 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 JSW Holdings will offset losses from the drop in JSW Holdings' long position.| KIOCL vs. HDFC Asset Management | KIOCL vs. Elgi Rubber | KIOCL vs. Alkali Metals Limited | KIOCL vs. KNR Constructions Limited |
| JSW Holdings vs. Syrma SGS Technology | JSW Holdings vs. V Mart Retail Limited | JSW Holdings vs. Cambridge Technology Enterprises | JSW Holdings vs. Newgen Software 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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