Correlation Between Jindal Poly and Hindustan Construction

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

Diversification Opportunities for Jindal Poly and Hindustan Construction

0.98

Correlation Coefficient

Jindal Poly  Hindustan Construction

Almost no diversification

The 3 months correlation between Jindal and Hindustan is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Jindal Poly Investment and Hindustan Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hindustan Construction 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 Hindustan Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hindustan Construction has no effect on the direction of Jindal Poly i.e., Jindal Poly and Hindustan Construction go up and down completely randomly.

Pair Corralation between Jindal Poly and Hindustan Construction

Assuming the 90 days trading horizon Jindal Poly Investment is expected to generate 0.59 times more return on investment than Hindustan Construction. However, Jindal Poly Investment is 1.7 times less risky than Hindustan Construction. It trades about -0.16 of its potential returns per unit of risk. Hindustan Construction is currently generating about -0.13 per unit of risk. If you would invest  90,265  in Jindal Poly Investment on December 27, 2024 and sell it today you would lose (21,725) from holding Jindal Poly Investment or give up 24.07% of portfolio value over 90 days.

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

Jindal Poly Investment  vs.  Hindustan Construction

Jindal Poly Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jindal Poly Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Hindustan Construction

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hindustan Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Jindal Poly and Hindustan Construction

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

The idea behind Jindal Poly Investment and Hindustan Construction 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.