Correlation Between Jindal Steel and N B

Can any of the company-specific risk be diversified away by investing in both Jindal Steel and N B 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 N B 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 N B I, you can compare the effects of market volatilities on Jindal Steel and N B 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 N B. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jindal Steel and N B.

Diversification Opportunities for Jindal Steel and N B

0.3

Correlation Coefficient

Jindal Steel  N B

Weak diversification

The 3 months correlation between Jindal and NBIFIN is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Jindal Steel Power and N B I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on N B I 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 N B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of N B I has no effect on the direction of Jindal Steel i.e., Jindal Steel and N B go up and down completely randomly.

Pair Corralation between Jindal Steel and N B

Assuming the 90 days trading horizon Jindal Steel Power is expected to under-perform the N B. But the stock apears to be less risky and, when comparing its historical volatility, Jindal Steel Power is 1.79 times less risky than N B. The stock trades about -0.05 of its potential returns per unit of risk. The N B I is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  238,830  in N B I on October 11, 2024 and sell it today you would earn a total of  67,270  from holding N B I or generate 28.17% return on investment over 90 days.

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

Jindal Steel Power  vs.  N B I

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

N B I

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in N B I are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, N B sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jindal Steel and N B

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

The idea behind Jindal Steel Power and N B I 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.

Check out your portfolio center.

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.