Correlation Between Industrial Investment and Jindal Stainless

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

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

Diversification Opportunities for Industrial Investment and Jindal Stainless

-0.41

Correlation Coefficient

Industrial Investment  Jindal Stainless

Very good diversification

The 3 months correlation between Industrial and Jindal is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Investment Trust and Jindal Stainless Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jindal Stainless and Industrial Investment 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 Industrial Investment Trust 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 Industrial Investment i.e., Industrial Investment and Jindal Stainless go up and down completely randomly.

Pair Corralation between Industrial Investment and Jindal Stainless

Assuming the 90 days trading horizon Industrial Investment Trust is expected to generate 1.41 times more return on investment than Jindal Stainless. However, Industrial Investment is 1.41 times more volatile than Jindal Stainless Limited. It trades about 0.11 of its potential returns per unit of risk. Jindal Stainless Limited is currently generating about 0.1 per unit of risk. If you would invest  8,440  in Industrial Investment Trust on September 23, 2024 and sell it today you would earn a total of  29,625  from holding Industrial Investment Trust or generate 351.01% return on investment over 90 days.

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

Industrial Investment Trust  vs.  Jindal Stainless Limited

Industrial Investment

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Investment Trust are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Industrial Investment 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 latest unfluctuating performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Industrial Investment and Jindal Stainless

The main advantage of trading using opposite Industrial Investment and Jindal Stainless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Investment 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 Industrial Investment Trust 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.