Correlation Between Eros International and Jindal Poly

Can any of the company-specific risk be diversified away by investing in both Eros International and Jindal Poly 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 Eros International and Jindal Poly into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eros International Media and Jindal Poly Investment, you can compare the effects of market volatilities on Eros International and Jindal Poly 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 Eros International with a short position of Jindal Poly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eros International and Jindal Poly.

Diversification Opportunities for Eros International and Jindal Poly

-0.65

Correlation Coefficient

Eros International  Jindal Poly

Excellent diversification

The 3 months correlation between Eros and Jindal is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Eros International Media and Jindal Poly Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jindal Poly Investment and Eros International 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 Eros International Media are associated (or correlated) with Jindal Poly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jindal Poly Investment has no effect on the direction of Eros International i.e., Eros International and Jindal Poly go up and down completely randomly.

Pair Corralation between Eros International and Jindal Poly

Assuming the 90 days trading horizon Eros International Media is expected to under-perform the Jindal Poly. But the stock apears to be less risky and, when comparing its historical volatility, Eros International Media is 1.0 times less risky than Jindal Poly. The stock trades about -0.02 of its potential returns per unit of risk. The Jindal Poly Investment is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  49,090  in Jindal Poly Investment on October 4, 2024 and sell it today you would earn a total of  38,360  from holding Jindal Poly Investment or generate 78.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Eros International Media  vs.  Jindal Poly Investment

Eros International Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eros International Media has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Jindal Poly Investment

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jindal Poly Investment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Jindal Poly displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eros International and Jindal Poly

The main advantage of trading using opposite Eros International and Jindal Poly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eros International position performs unexpectedly, Jindal Poly 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 Poly will offset losses from the drop in Jindal Poly's long position.

The idea behind Eros International Media and Jindal Poly Investment 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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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.