Correlation Between Jaypee Infratech and JSW Holdings

Can any of the company-specific risk be diversified away by investing in both Jaypee Infratech and JSW Holdings 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 Jaypee Infratech and JSW Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jaypee Infratech Limited and JSW Holdings Limited, you can compare the effects of market volatilities on Jaypee Infratech and JSW Holdings 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 Jaypee Infratech with a short position of JSW Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jaypee Infratech and JSW Holdings.

Diversification Opportunities for Jaypee Infratech and JSW Holdings

0.0

Correlation Coefficient

Jaypee Infratech  JSW Holdings

Pay attention - limited upside

The 3 months correlation between Jaypee and JSW is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Jaypee Infratech Limited and JSW Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JSW Holdings Limited and Jaypee Infratech 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 Jaypee Infratech Limited are associated (or correlated) with JSW Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JSW Holdings Limited has no effect on the direction of Jaypee Infratech i.e., Jaypee Infratech and JSW Holdings go up and down completely randomly.

Pair Corralation between Jaypee Infratech and JSW Holdings

If you would invest  125.00  in Jaypee Infratech Limited on December 4, 2024 and sell it today you would earn a total of  0.00  from holding Jaypee Infratech Limited or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	70.0%
Values	Daily Returns

Jaypee Infratech Limited  vs.  JSW Holdings Limited

Jaypee Infratech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jaypee Infratech Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Jaypee Infratech is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

JSW Holdings Limited

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JSW Holdings Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, JSW Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jaypee Infratech and JSW Holdings

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

The idea behind Jaypee Infratech Limited and JSW Holdings 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.