Correlation Between Jindal Steel and PVR INOX

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

Diversification Opportunities for Jindal Steel and PVR INOX

0.22

Correlation Coefficient

Jindal Steel  PVR INOX

Modest diversification

The 3 months correlation between Jindal and PVR is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Jindal Steel Power and PVR INOX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PVR INOX 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 PVR INOX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PVR INOX has no effect on the direction of Jindal Steel i.e., Jindal Steel and PVR INOX go up and down completely randomly.

Pair Corralation between Jindal Steel and PVR INOX

Assuming the 90 days trading horizon Jindal Steel Power is expected to generate 0.92 times more return on investment than PVR INOX. However, Jindal Steel Power is 1.08 times less risky than PVR INOX. It trades about -0.06 of its potential returns per unit of risk. PVR INOX is currently generating about -0.27 per unit of risk. If you would invest  100,390  in Jindal Steel Power on October 11, 2024 and sell it today you would lose (7,235) from holding Jindal Steel Power or give up 7.21% of portfolio value over 90 days.

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

Jindal Steel Power  vs.  PVR INOX

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 latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

PVR INOX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PVR INOX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Jindal Steel and PVR INOX

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

The idea behind Jindal Steel Power and PVR INOX 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.