Correlation Between Jindal Poly and HEG

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

Diversification Opportunities for Jindal Poly and HEG

0.44

Correlation Coefficient

Jindal Poly  HEG

Very weak diversification

The 3 months correlation between Jindal and HEG is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Jindal Poly Investment and HEG Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEG Limited 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 HEG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEG Limited has no effect on the direction of Jindal Poly i.e., Jindal Poly and HEG go up and down completely randomly.

Pair Corralation between Jindal Poly and HEG

Assuming the 90 days trading horizon Jindal Poly is expected to generate 223.95 times less return on investment than HEG. But when comparing it to its historical volatility, Jindal Poly Investment is 62.64 times less risky than HEG. It trades about 0.05 of its potential returns per unit of risk. HEG Limited is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  16,935  in HEG Limited on October 26, 2024 and sell it today you would earn a total of  24,370  from holding HEG Limited or generate 143.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.25%
Values	Daily Returns

Jindal Poly Investment  vs.  HEG Limited

Jindal Poly Investment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jindal Poly Investment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Jindal Poly is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

HEG Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HEG Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, HEG is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Jindal Poly and HEG

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

The idea behind Jindal Poly Investment and HEG 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.