Correlation Between Jindal Drilling and Next Mediaworks

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

By analyzing existing cross correlation between Jindal Drilling And and Next Mediaworks Limited, you can compare the effects of market volatilities on Jindal Drilling and Next Mediaworks 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 Drilling with a short position of Next Mediaworks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jindal Drilling and Next Mediaworks.

Diversification Opportunities for Jindal Drilling and Next Mediaworks

0.78

Correlation Coefficient

Jindal Drilling  Next Mediaworks

Poor diversification

The 3 months correlation between Jindal and Next is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Jindal Drilling And and Next Mediaworks Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Mediaworks and Jindal Drilling 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 Drilling And are associated (or correlated) with Next Mediaworks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Mediaworks has no effect on the direction of Jindal Drilling i.e., Jindal Drilling and Next Mediaworks go up and down completely randomly.

Pair Corralation between Jindal Drilling and Next Mediaworks

Assuming the 90 days trading horizon Jindal Drilling And is expected to generate 1.12 times more return on investment than Next Mediaworks. However, Jindal Drilling is 1.12 times more volatile than Next Mediaworks Limited. It trades about -0.07 of its potential returns per unit of risk. Next Mediaworks Limited is currently generating about -0.43 per unit of risk. If you would invest  82,460  in Jindal Drilling And on October 4, 2024 and sell it today you would lose (3,190) from holding Jindal Drilling And or give up 3.87% of portfolio value over 90 days.

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

Jindal Drilling And  vs.  Next Mediaworks Limited

Jindal Drilling And

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jindal Drilling And are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward indicators, Jindal Drilling disclosed solid returns over the last few months and may actually be approaching a breakup point.

Next Mediaworks

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Next Mediaworks Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Next Mediaworks exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jindal Drilling and Next Mediaworks

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

The idea behind Jindal Drilling And and Next Mediaworks 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..