Correlation Between VA Tech and JSW Holdings
Can any of the company-specific risk be diversified away by investing in both VA Tech 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 VA Tech and JSW Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VA Tech Wabag and JSW Holdings Limited, you can compare the effects of market volatilities on VA Tech 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 VA Tech with a short position of JSW Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of VA Tech and JSW Holdings.
Diversification Opportunities for VA Tech and JSW Holdings
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between WABAG and JSW is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding VA Tech Wabag 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 VA Tech 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 VA Tech Wabag 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 VA Tech i.e., VA Tech and JSW Holdings go up and down completely randomly.
Pair Corralation between VA Tech and JSW Holdings
Assuming the 90 days trading horizon VA Tech is expected to generate 2.24 times less return on investment than JSW Holdings. But when comparing it to its historical volatility, VA Tech Wabag is 1.31 times less risky than JSW Holdings. It trades about 0.09 of its potential returns per unit of risk. JSW Holdings Limited is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 725,830 in JSW Holdings Limited on September 23, 2024 and sell it today you would earn a total of 716,015 from holding JSW Holdings Limited or generate 98.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VA Tech Wabag vs. JSW Holdings Limited
Performance |
| Timeline |
| VA Tech Wabag |
| JSW Holdings Limited |
VA Tech and JSW Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VA Tech and JSW Holdings
The main advantage of trading using opposite VA Tech and JSW Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VA Tech 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.| VA Tech vs. R S Software | VA Tech vs. Computer Age Management | VA Tech vs. Indraprastha Medical | VA Tech vs. Cambridge Technology Enterprises |
| JSW Holdings vs. Servotech Power Systems | JSW Holdings vs. VA Tech Wabag | JSW Holdings vs. Kavveri Telecom Products | JSW Holdings vs. Agro Tech Foods |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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