Correlation Between GTL and Jindal Drilling

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

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

Diversification Opportunities for GTL and Jindal Drilling

-0.4

Correlation Coefficient

GTL  Jindal Drilling

Very good diversification

The 3 months correlation between GTL and Jindal is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding GTL Limited 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 GTL 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 GTL Limited 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 GTL i.e., GTL and Jindal Drilling go up and down completely randomly.

Pair Corralation between GTL and Jindal Drilling

Assuming the 90 days trading horizon GTL Limited is expected to under-perform the Jindal Drilling. But the stock apears to be less risky and, when comparing its historical volatility, GTL Limited is 1.55 times less risky than Jindal Drilling. The stock trades about -0.2 of its potential returns per unit of risk. The Jindal Drilling And is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  85,395  in Jindal Drilling And on November 29, 2024 and sell it today you would earn a total of  1,965  from holding Jindal Drilling And or generate 2.3% return on investment over 90 days.

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

GTL Limited  vs.  Jindal Drilling And

GTL Limited

Risk-Adjusted Performance

Very Weak

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

Jindal Drilling And

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jindal Drilling And are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating forward indicators, Jindal Drilling may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with GTL and Jindal Drilling

The main advantage of trading using opposite GTL and Jindal Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GTL 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 GTL Limited 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.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.