Correlation Between ILFS Investment and JSW Holdings

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

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

Diversification Opportunities for ILFS Investment and JSW Holdings

-0.09

Correlation Coefficient

ILFS Investment  JSW Holdings

Good diversification

The 3 months correlation between ILFS and JSW is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding ILFS Investment Managers and JSW Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JSW Holdings Limited and ILFS 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 ILFS Investment Managers are associated (or correlated) with JSW Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JSW Holdings Limited has no effect on the direction of ILFS Investment i.e., ILFS Investment and JSW Holdings go up and down completely randomly.

Pair Corralation between ILFS Investment and JSW Holdings

Assuming the 90 days trading horizon ILFS Investment Managers is expected to under-perform the JSW Holdings. But the stock apears to be less risky and, when comparing its historical volatility, ILFS Investment Managers is 1.66 times less risky than JSW Holdings. The stock trades about -0.13 of its potential returns per unit of risk. The JSW Holdings Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,543,485  in JSW Holdings Limited on October 9, 2024 and sell it today you would earn a total of  179,570  from holding JSW Holdings Limited or generate 11.63% return on investment over 90 days.

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

ILFS Investment Managers  vs.  JSW Holdings Limited

ILFS Investment Managers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ILFS Investment Managers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady 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.

JSW Holdings Limited

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JSW Holdings Limited are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, JSW Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ILFS Investment and JSW Holdings

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

The idea behind ILFS Investment Managers and JSW Holdings 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.