Correlation Between Jindal Steel and Computer Age

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

By analyzing existing cross correlation between Jindal Steel Power and Computer Age Management, you can compare the effects of market volatilities on Jindal Steel and Computer Age 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 Jindal Steel with a short position of Computer Age. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jindal Steel and Computer Age.

Diversification Opportunities for Jindal Steel and Computer Age

-0.21

Correlation Coefficient

Jindal Steel  Computer Age

Very good diversification

The 3 months correlation between Jindal and Computer is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Jindal Steel Power and Computer Age Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer Age Management and Jindal Steel 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 Jindal Steel Power are associated (or correlated) with Computer Age. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer Age Management has no effect on the direction of Jindal Steel i.e., Jindal Steel and Computer Age go up and down completely randomly.

Pair Corralation between Jindal Steel and Computer Age

Assuming the 90 days trading horizon Jindal Steel is expected to generate 34.39 times less return on investment than Computer Age. But when comparing it to its historical volatility, Jindal Steel Power is 1.36 times less risky than Computer Age. It trades about 0.0 of its potential returns per unit of risk. Computer Age Management is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  439,738  in Computer Age Management on September 12, 2024 and sell it today you would earn a total of  81,377  from holding Computer Age Management or generate 18.51% return on investment over 90 days.

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

Jindal Steel Power  vs.  Computer Age Management

Jindal Steel Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jindal Steel Power has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Jindal Steel is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Computer Age Management

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Computer Age Management are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Computer Age unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jindal Steel and Computer Age

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

The idea behind Jindal Steel Power and Computer Age Management 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.