Correlation Between JSW Holdings and Automotive Stampings

Can any of the company-specific risk be diversified away by investing in both JSW Holdings and Automotive Stampings 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 JSW Holdings and Automotive Stampings into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for JSW Holdings and Automotive Stampings

-0.62

Correlation Coefficient

JSW Holdings  Automotive Stampings

Excellent diversification

The 3 months correlation between JSW and Automotive is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding JSW Holdings Limited and Automotive Stampings and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automotive Stampings and and JSW Holdings 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 JSW Holdings Limited are associated (or correlated) with Automotive Stampings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automotive Stampings and has no effect on the direction of JSW Holdings i.e., JSW Holdings and Automotive Stampings go up and down completely randomly.

Pair Corralation between JSW Holdings and Automotive Stampings

Assuming the 90 days trading horizon JSW Holdings Limited is expected to under-perform the Automotive Stampings. But the stock apears to be less risky and, when comparing its historical volatility, JSW Holdings Limited is 1.25 times less risky than Automotive Stampings. The stock trades about -0.18 of its potential returns per unit of risk. The Automotive Stampings and is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  65,230  in Automotive Stampings and on September 25, 2024 and sell it today you would lose (20.00) from holding Automotive Stampings and or give up 0.03% of portfolio value over 90 days.

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

JSW Holdings Limited  vs.  Automotive Stampings and

JSW Holdings Limited

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JSW Holdings Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, JSW Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Automotive Stampings and

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Automotive Stampings and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with JSW Holdings and Automotive Stampings

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

The idea behind JSW Holdings Limited and Automotive Stampings and 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.