Correlation Between Jindal Poly and Home First

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

Diversification Opportunities for Jindal Poly and Home First

-0.46

Correlation Coefficient

Jindal Poly  Home First

Very good diversification

The 3 months correlation between Jindal and Home is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Jindal Poly Investment and Home First Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home First Finance 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 Home First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home First Finance has no effect on the direction of Jindal Poly i.e., Jindal Poly and Home First go up and down completely randomly.

Pair Corralation between Jindal Poly and Home First

Assuming the 90 days trading horizon Jindal Poly Investment is expected to generate 1.4 times more return on investment than Home First. However, Jindal Poly is 1.4 times more volatile than Home First Finance. It trades about 0.06 of its potential returns per unit of risk. Home First Finance is currently generating about 0.04 per unit of risk. If you would invest  42,125  in Jindal Poly Investment on October 23, 2024 and sell it today you would earn a total of  37,040  from holding Jindal Poly Investment or generate 87.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Jindal Poly Investment  vs.  Home First Finance

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 newest stock price disarray, may contribute to short-term losses for the investors.

Home First Finance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Home First Finance has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Home First is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Jindal Poly and Home First

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

The idea behind Jindal Poly Investment and Home First Finance 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..