Correlation Between Jai Balaji and Welspun Corp

Can any of the company-specific risk be diversified away by investing in both Jai Balaji and Welspun Corp 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 Welspun Corp 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 Welspun Corp Limited, you can compare the effects of market volatilities on Jai Balaji and Welspun Corp 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 Welspun Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jai Balaji and Welspun Corp.

Diversification Opportunities for Jai Balaji and Welspun Corp

0.31

Correlation Coefficient

Jai Balaji  Welspun Corp

Weak diversification

The 3 months correlation between Jai and Welspun is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Jai Balaji Industries and Welspun Corp Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Welspun Corp Limited 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 Welspun Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Welspun Corp Limited has no effect on the direction of Jai Balaji i.e., Jai Balaji and Welspun Corp go up and down completely randomly.

Pair Corralation between Jai Balaji and Welspun Corp

Assuming the 90 days trading horizon Jai Balaji Industries is expected to under-perform the Welspun Corp. In addition to that, Jai Balaji is 1.22 times more volatile than Welspun Corp Limited. It trades about -0.09 of its total potential returns per unit of risk. Welspun Corp Limited is currently generating about 0.04 per unit of volatility. If you would invest  79,830  in Welspun Corp Limited on December 26, 2024 and sell it today you would earn a total of  3,090  from holding Welspun Corp Limited or generate 3.87% return on investment over 90 days.

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

Jai Balaji Industries  vs.  Welspun Corp Limited

Jai Balaji Industries

Risk-Adjusted Performance

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 fragile performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Welspun Corp Limited

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Welspun Corp Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Welspun Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Jai Balaji and Welspun Corp

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

The idea behind Jai Balaji Industries and Welspun Corp 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.