Correlation Between NMDC Steel and Jindal Steel
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By analyzing existing cross correlation between NMDC Steel Limited and Jindal Steel Power, you can compare the effects of market volatilities on NMDC Steel and Jindal Steel 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 NMDC Steel with a short position of Jindal Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMDC Steel and Jindal Steel.
Diversification Opportunities for NMDC Steel and Jindal Steel
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NMDC and Jindal is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding NMDC Steel Limited and Jindal Steel Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jindal Steel Power and NMDC 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 NMDC Steel Limited are associated (or correlated) with Jindal Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jindal Steel Power has no effect on the direction of NMDC Steel i.e., NMDC Steel and Jindal Steel go up and down completely randomly.
Pair Corralation between NMDC Steel and Jindal Steel
Assuming the 90 days trading horizon NMDC Steel is expected to generate 1.13 times less return on investment than Jindal Steel. In addition to that, NMDC Steel is 1.42 times more volatile than Jindal Steel Power. It trades about 0.05 of its total potential returns per unit of risk. Jindal Steel Power is currently generating about 0.08 per unit of volatility. If you would invest 53,770 in Jindal Steel Power on September 12, 2024 and sell it today you would earn a total of 46,465 from holding Jindal Steel Power or generate 86.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 91.0% |
| Values | Daily Returns |
NMDC Steel Limited vs. Jindal Steel Power
Performance |
| Timeline |
| NMDC Steel Limited |
| Jindal Steel Power |
NMDC Steel and Jindal Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMDC Steel and Jindal Steel
The main advantage of trading using opposite NMDC Steel and Jindal Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMDC Steel position performs unexpectedly, Jindal Steel 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 Jindal Steel will offset losses from the drop in Jindal Steel's long position.| NMDC Steel vs. Steel Authority of | NMDC Steel vs. Embassy Office Parks | NMDC Steel vs. Indian Metals Ferro | NMDC Steel vs. JTL Industries |
| Jindal Steel vs. Steel Authority of | Jindal Steel vs. Embassy Office Parks | Jindal Steel vs. Indian Metals Ferro | Jindal Steel vs. JTL Industries |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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