Correlation Between Jindal Poly and Byke Hospitality

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

By analyzing existing cross correlation between Jindal Poly Investment and The Byke Hospitality, you can compare the effects of market volatilities on Jindal Poly and Byke Hospitality 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 Poly with a short position of Byke Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jindal Poly and Byke Hospitality.

Diversification Opportunities for Jindal Poly and Byke Hospitality

0.45

Correlation Coefficient

Jindal Poly  Byke Hospitality

Very weak diversification

The 3 months correlation between Jindal and Byke is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Jindal Poly Investment and The Byke Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byke Hospitality and Jindal Poly 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 Poly Investment are associated (or correlated) with Byke Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Byke Hospitality has no effect on the direction of Jindal Poly i.e., Jindal Poly and Byke Hospitality go up and down completely randomly.

Pair Corralation between Jindal Poly and Byke Hospitality

Assuming the 90 days trading horizon Jindal Poly is expected to generate 13.35 times less return on investment than Byke Hospitality. But when comparing it to its historical volatility, Jindal Poly Investment is 1.03 times less risky than Byke Hospitality. It trades about 0.04 of its potential returns per unit of risk. The Byke Hospitality is currently generating about 0.57 of returns per unit of risk over similar time horizon. If you would invest  7,163  in The Byke Hospitality on September 19, 2024 and sell it today you would earn a total of  2,733  from holding The Byke Hospitality or generate 38.15% return on investment over 90 days.

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

Jindal Poly Investment  vs.  The Byke Hospitality

Jindal Poly Investment

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jindal Poly Investment are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Jindal Poly displayed solid returns over the last few months and may actually be approaching a breakup point.

Byke Hospitality

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Byke Hospitality are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Byke Hospitality unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jindal Poly and Byke Hospitality

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

The idea behind Jindal Poly Investment and The Byke Hospitality 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.