Correlation Between Garware Hi and Jindal Stainless

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

By analyzing existing cross correlation between Garware Hi Tech Films and Jindal Stainless Limited, you can compare the effects of market volatilities on Garware Hi and Jindal Stainless 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 Garware Hi with a short position of Jindal Stainless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garware Hi and Jindal Stainless.

Diversification Opportunities for Garware Hi and Jindal Stainless

0.04

Correlation Coefficient

Garware Hi  Jindal Stainless

Significant diversification

The 3 months correlation between Garware and Jindal is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Garware Hi Tech Films and Jindal Stainless Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jindal Stainless and Garware Hi 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 Garware Hi Tech Films are associated (or correlated) with Jindal Stainless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jindal Stainless has no effect on the direction of Garware Hi i.e., Garware Hi and Jindal Stainless go up and down completely randomly.

Pair Corralation between Garware Hi and Jindal Stainless

Assuming the 90 days trading horizon Garware Hi Tech Films is expected to generate 1.63 times more return on investment than Jindal Stainless. However, Garware Hi is 1.63 times more volatile than Jindal Stainless Limited. It trades about 0.14 of its potential returns per unit of risk. Jindal Stainless Limited is currently generating about -0.11 per unit of risk. If you would invest  382,485  in Garware Hi Tech Films on October 11, 2024 and sell it today you would earn a total of  110,760  from holding Garware Hi Tech Films or generate 28.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Garware Hi Tech Films  vs.  Jindal Stainless Limited

Garware Hi Tech

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Garware Hi Tech Films are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Garware Hi unveiled solid returns over the last few months and may actually be approaching a breakup point.

Jindal Stainless

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jindal Stainless Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and 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.

Pair Trading with Garware Hi and Jindal Stainless

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

The idea behind Garware Hi Tech Films and Jindal Stainless 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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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.