Correlation Between Indo Borax and Jindal Poly

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

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

Diversification Opportunities for Indo Borax and Jindal Poly

0.93

Correlation Coefficient

Indo Borax  Jindal Poly

Almost no diversification

The 3 months correlation between Indo and Jindal is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Indo Borax Chemicals 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 Indo Borax 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 Indo Borax Chemicals 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 Indo Borax i.e., Indo Borax and Jindal Poly go up and down completely randomly.

Pair Corralation between Indo Borax and Jindal Poly

Assuming the 90 days trading horizon Indo Borax Chemicals is expected to generate 1.18 times more return on investment than Jindal Poly. However, Indo Borax is 1.18 times more volatile than Jindal Poly Investment. It trades about -0.14 of its potential returns per unit of risk. Jindal Poly Investment is currently generating about -0.3 per unit of risk. If you would invest  19,756  in Indo Borax Chemicals on December 2, 2024 and sell it today you would lose (4,535) from holding Indo Borax Chemicals or give up 22.96% of portfolio value over 90 days.

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

Indo Borax Chemicals  vs.  Jindal Poly Investment

Indo Borax Chemicals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Indo Borax Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Jindal Poly Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jindal Poly Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Indo Borax and Jindal Poly

The main advantage of trading using opposite Indo Borax and Jindal Poly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indo Borax 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 Indo Borax Chemicals 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.