Correlation Between JSW Holdings and Fiberweb

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

Diversification Opportunities for JSW Holdings and Fiberweb

0.67

Correlation Coefficient

JSW Holdings  Fiberweb

Poor diversification

The 3 months correlation between JSW and Fiberweb is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding JSW Holdings Limited and Fiberweb Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiberweb Limited 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 Fiberweb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiberweb Limited has no effect on the direction of JSW Holdings i.e., JSW Holdings and Fiberweb go up and down completely randomly.

Pair Corralation between JSW Holdings and Fiberweb

Assuming the 90 days trading horizon JSW Holdings Limited is expected to generate 1.42 times more return on investment than Fiberweb. However, JSW Holdings is 1.42 times more volatile than Fiberweb Limited. It trades about 0.2 of its potential returns per unit of risk. Fiberweb Limited is currently generating about 0.06 per unit of risk. If you would invest  926,680  in JSW Holdings Limited on October 15, 2024 and sell it today you would earn a total of  748,710  from holding JSW Holdings Limited or generate 80.79% return on investment over 90 days.

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

JSW Holdings Limited  vs.  Fiberweb Limited

JSW Holdings Limited

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JSW Holdings Limited are ranked lower than 15 (%) 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.

Fiberweb Limited

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fiberweb Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Fiberweb exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JSW Holdings and Fiberweb

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

The idea behind JSW Holdings Limited and Fiberweb 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.