Correlation Between JS Investments and Mughal Iron

Can any of the company-specific risk be diversified away by investing in both JS Investments and Mughal Iron 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 JS Investments and Mughal Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JS Investments and Mughal Iron Steel, you can compare the effects of market volatilities on JS Investments and Mughal Iron 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 JS Investments with a short position of Mughal Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of JS Investments and Mughal Iron.

Diversification Opportunities for JS Investments and Mughal Iron

0.18

Correlation Coefficient

JS Investments  Mughal Iron

Average diversification

The 3 months correlation between JSIL and Mughal is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding JS Investments and Mughal Iron Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mughal Iron Steel and JS Investments 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 JS Investments are associated (or correlated) with Mughal Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mughal Iron Steel has no effect on the direction of JS Investments i.e., JS Investments and Mughal Iron go up and down completely randomly.

Pair Corralation between JS Investments and Mughal Iron

Assuming the 90 days trading horizon JS Investments is expected to under-perform the Mughal Iron. In addition to that, JS Investments is 1.23 times more volatile than Mughal Iron Steel. It trades about -0.1 of its total potential returns per unit of risk. Mughal Iron Steel is currently generating about -0.01 per unit of volatility. If you would invest  8,142  in Mughal Iron Steel on October 10, 2024 and sell it today you would lose (127.00) from holding Mughal Iron Steel or give up 1.56% of portfolio value over 90 days.

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

JS Investments  vs.  Mughal Iron Steel

JS Investments

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JS Investments are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, JS Investments may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Mughal Iron Steel

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mughal Iron Steel are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical indicators, Mughal Iron is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JS Investments and Mughal Iron

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

The idea behind JS Investments and Mughal Iron Steel 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.