Correlation Between Jindal Stainless and Hexa Tradex

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

By analyzing existing cross correlation between Jindal Stainless Limited and Hexa Tradex Limited, you can compare the effects of market volatilities on Jindal Stainless and Hexa Tradex 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 Stainless with a short position of Hexa Tradex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jindal Stainless and Hexa Tradex.

Diversification Opportunities for Jindal Stainless and Hexa Tradex

0.66

Correlation Coefficient

Jindal Stainless  Hexa Tradex

Poor diversification

The 3 months correlation between Jindal and Hexa is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Jindal Stainless Limited and Hexa Tradex Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexa Tradex Limited and Jindal Stainless 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 Stainless Limited are associated (or correlated) with Hexa Tradex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexa Tradex Limited has no effect on the direction of Jindal Stainless i.e., Jindal Stainless and Hexa Tradex go up and down completely randomly.

Pair Corralation between Jindal Stainless and Hexa Tradex

Assuming the 90 days trading horizon Jindal Stainless Limited is expected to generate 0.52 times more return on investment than Hexa Tradex. However, Jindal Stainless Limited is 1.94 times less risky than Hexa Tradex. It trades about 0.26 of its potential returns per unit of risk. Hexa Tradex Limited is currently generating about 0.08 per unit of risk. If you would invest  66,760  in Jindal Stainless Limited on September 25, 2024 and sell it today you would earn a total of  6,245  from holding Jindal Stainless Limited or generate 9.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Jindal Stainless Limited  vs.  Hexa Tradex Limited

Jindal Stainless

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jindal Stainless Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Hexa Tradex Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hexa Tradex Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Jindal Stainless and Hexa Tradex

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

The idea behind Jindal Stainless Limited and Hexa Tradex 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.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.