Correlation Between Generic Engineering and Jindal Drilling

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

By analyzing existing cross correlation between Generic Engineering Construction and Jindal Drilling And, you can compare the effects of market volatilities on Generic Engineering and Jindal Drilling 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 Generic Engineering with a short position of Jindal Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Generic Engineering and Jindal Drilling.

Diversification Opportunities for Generic Engineering and Jindal Drilling

0.26

Correlation Coefficient

Generic Engineering  Jindal Drilling

Modest diversification

The 3 months correlation between Generic and Jindal is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Generic Engineering Constructi and Jindal Drilling And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jindal Drilling And and Generic Engineering 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 Generic Engineering Construction are associated (or correlated) with Jindal Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jindal Drilling And has no effect on the direction of Generic Engineering i.e., Generic Engineering and Jindal Drilling go up and down completely randomly.

Pair Corralation between Generic Engineering and Jindal Drilling

Assuming the 90 days trading horizon Generic Engineering Construction is expected to under-perform the Jindal Drilling. In addition to that, Generic Engineering is 1.77 times more volatile than Jindal Drilling And. It trades about -0.14 of its total potential returns per unit of risk. Jindal Drilling And is currently generating about -0.19 per unit of volatility. If you would invest  82,250  in Jindal Drilling And on October 9, 2024 and sell it today you would lose (7,135) from holding Jindal Drilling And or give up 8.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Generic Engineering Constructi  vs.  Jindal Drilling And

Generic Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Generic Engineering Construction has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Generic Engineering is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Jindal Drilling And

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jindal Drilling And are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady forward indicators, Jindal Drilling disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Generic Engineering and Jindal Drilling

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

The idea behind Generic Engineering Construction and Jindal Drilling And 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.