Correlation Between JSW Holdings and Emcure Pharmaceuticals

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

Diversification Opportunities for JSW Holdings and Emcure Pharmaceuticals

-0.51

Correlation Coefficient

JSW Holdings  Emcure Pharmaceuticals

Excellent diversification

The 3 months correlation between JSW and Emcure is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding JSW Holdings Limited and Emcure Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emcure Pharmaceuticals 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 Emcure Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emcure Pharmaceuticals has no effect on the direction of JSW Holdings i.e., JSW Holdings and Emcure Pharmaceuticals go up and down completely randomly.

Pair Corralation between JSW Holdings and Emcure Pharmaceuticals

Assuming the 90 days trading horizon JSW Holdings Limited is expected to generate 0.79 times more return on investment than Emcure Pharmaceuticals. However, JSW Holdings Limited is 1.26 times less risky than Emcure Pharmaceuticals. It trades about 0.12 of its potential returns per unit of risk. Emcure Pharmaceuticals is currently generating about 0.07 per unit of risk. If you would invest  411,880  in JSW Holdings Limited on October 15, 2024 and sell it today you would earn a total of  1,351,685  from holding JSW Holdings Limited or generate 328.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	26.75%
Values	Daily Returns

JSW Holdings Limited  vs.  Emcure Pharmaceuticals

JSW Holdings Limited

Risk-Adjusted Performance

17 of 100

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 inconsistent basic indicators, JSW Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Emcure Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emcure Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic 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 JSW Holdings and Emcure Pharmaceuticals

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

The idea behind JSW Holdings Limited and Emcure Pharmaceuticals 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.