Correlation Between JSW Holdings and Capacite Infraprojects

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

Diversification Opportunities for JSW Holdings and Capacite Infraprojects

-0.24

Correlation Coefficient

JSW Holdings  Capacite Infraprojects

Very good diversification

The 3 months correlation between JSW and Capacite is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding JSW Holdings Limited and Capacite Infraprojects Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capacite Infraprojects 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 Capacite Infraprojects. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capacite Infraprojects has no effect on the direction of JSW Holdings i.e., JSW Holdings and Capacite Infraprojects go up and down completely randomly.

Pair Corralation between JSW Holdings and Capacite Infraprojects

Assuming the 90 days trading horizon JSW Holdings Limited is expected to generate 1.22 times more return on investment than Capacite Infraprojects. However, JSW Holdings is 1.22 times more volatile than Capacite Infraprojects Limited. It trades about 0.22 of its potential returns per unit of risk. Capacite Infraprojects Limited is currently generating about -0.1 per unit of risk. If you would invest  1,461,575  in JSW Holdings Limited on December 30, 2024 and sell it today you would earn a total of  837,010  from holding JSW Holdings Limited or generate 57.27% return on investment over 90 days.

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

JSW Holdings Limited  vs.  Capacite Infraprojects Limited

JSW Holdings Limited

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JSW Holdings Limited are ranked lower than 17 (%) 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.

Capacite Infraprojects

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capacite Infraprojects Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in April 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 Capacite Infraprojects

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

The idea behind JSW Holdings Limited and Capacite Infraprojects 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.