Correlation Between Southern Petrochemicals and JSW Holdings
Can any of the company-specific risk be diversified away by investing in both Southern Petrochemicals 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 Southern Petrochemicals and JSW Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Petrochemicals Industries and JSW Holdings Limited, you can compare the effects of market volatilities on Southern Petrochemicals 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 Southern Petrochemicals with a short position of JSW Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Petrochemicals and JSW Holdings.
Diversification Opportunities for Southern Petrochemicals and JSW Holdings
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Southern and JSW is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Southern Petrochemicals Indust 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 Southern Petrochemicals 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 Southern Petrochemicals Industries 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 Southern Petrochemicals i.e., Southern Petrochemicals and JSW Holdings go up and down completely randomly.
Pair Corralation between Southern Petrochemicals and JSW Holdings
Assuming the 90 days trading horizon Southern Petrochemicals is expected to generate 27.21 times less return on investment than JSW Holdings. But when comparing it to its historical volatility, Southern Petrochemicals Industries is 2.2 times less risky than JSW Holdings. It trades about 0.02 of its potential returns per unit of risk. JSW Holdings Limited is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 985,020 in JSW Holdings Limited on October 24, 2024 and sell it today you would earn a total of 875,835 from holding JSW Holdings Limited or generate 88.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Petrochemicals Indust vs. JSW Holdings Limited
Performance |
| Timeline |
| Southern Petrochemicals |
| JSW Holdings Limited |
Southern Petrochemicals and JSW Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Petrochemicals and JSW Holdings
The main advantage of trading using opposite Southern Petrochemicals and JSW Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Petrochemicals 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.| Southern Petrochemicals vs. NMDC Limited | Southern Petrochemicals vs. Steel Authority of | Southern Petrochemicals vs. Embassy Office Parks | Southern Petrochemicals vs. Jai Balaji Industries |
| JSW Holdings vs. Southern Petrochemicals Industries | JSW Holdings vs. JGCHEMICALS LIMITED | JSW Holdings vs. Hindcon Chemicals Limited | JSW Holdings vs. Rashtriya Chemicals and |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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