Correlation Between Silly Monks and JSW Steel

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

Diversification Opportunities for Silly Monks and JSW Steel

-0.15
  Correlation Coefficient

Good diversification

The 3 months correlation between Silly and JSW is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Silly Monks Entertainment and JSW Steel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JSW Steel Limited and Silly Monks 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 Silly Monks Entertainment are associated (or correlated) with JSW Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JSW Steel Limited has no effect on the direction of Silly Monks i.e., Silly Monks and JSW Steel go up and down completely randomly.

Pair Corralation between Silly Monks and JSW Steel

Assuming the 90 days trading horizon Silly Monks Entertainment is expected to generate 1.81 times more return on investment than JSW Steel. However, Silly Monks is 1.81 times more volatile than JSW Steel Limited. It trades about -0.03 of its potential returns per unit of risk. JSW Steel Limited is currently generating about -0.09 per unit of risk. If you would invest  2,249  in Silly Monks Entertainment on August 30, 2024 and sell it today you would lose (108.00) from holding Silly Monks Entertainment or give up 4.8% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy97.62%
ValuesDaily Returns

Silly Monks Entertainment  vs.  JSW Steel Limited

 Performance 
       Timeline  
Silly Monks Entertainment 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Silly Monks Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.
JSW Steel Limited 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in JSW Steel Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, JSW Steel is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Silly Monks and JSW Steel Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Silly Monks and JSW Steel

The main advantage of trading using opposite Silly Monks and JSW Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silly Monks position performs unexpectedly, JSW 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 JSW Steel will offset losses from the drop in JSW Steel's long position.
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The idea behind Silly Monks Entertainment and JSW Steel Limited 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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