Correlation Between Jai Balaji and Kalyani Steels

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

By analyzing existing cross correlation between Jai Balaji Industries and Kalyani Steels Limited, you can compare the effects of market volatilities on Jai Balaji and Kalyani Steels 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 Jai Balaji with a short position of Kalyani Steels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jai Balaji and Kalyani Steels.

Diversification Opportunities for Jai Balaji and Kalyani Steels

-0.47

Correlation Coefficient

Jai Balaji  Kalyani Steels

Very good diversification

The 3 months correlation between Jai and Kalyani is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Jai Balaji Industries and Kalyani Steels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalyani Steels and Jai Balaji 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 Jai Balaji Industries are associated (or correlated) with Kalyani Steels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kalyani Steels has no effect on the direction of Jai Balaji i.e., Jai Balaji and Kalyani Steels go up and down completely randomly.

Pair Corralation between Jai Balaji and Kalyani Steels

Assuming the 90 days trading horizon Jai Balaji Industries is expected to generate 1.12 times more return on investment than Kalyani Steels. However, Jai Balaji is 1.12 times more volatile than Kalyani Steels Limited. It trades about 0.2 of its potential returns per unit of risk. Kalyani Steels Limited is currently generating about 0.1 per unit of risk. If you would invest  5,560  in Jai Balaji Industries on October 5, 2024 and sell it today you would earn a total of  84,710  from holding Jai Balaji Industries or generate 1523.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.38%
Values	Daily Returns

Jai Balaji Industries  vs.  Kalyani Steels Limited

Jai Balaji Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jai Balaji Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Kalyani Steels

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kalyani Steels Limited are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Kalyani Steels exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jai Balaji and Kalyani Steels

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

The idea behind Jai Balaji Industries and Kalyani Steels 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.