Correlation Between JSW Holdings and KEC International
Can any of the company-specific risk be diversified away by investing in both JSW Holdings and KEC International 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 KEC International 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 KEC International Limited, you can compare the effects of market volatilities on JSW Holdings and KEC International 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 KEC International. Check out your portfolio center. Please also check ongoing floating volatility patterns of JSW Holdings and KEC International.
Diversification Opportunities for JSW Holdings and KEC International
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between JSW and KEC is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding JSW Holdings Limited and KEC International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEC International 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 KEC International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEC International has no effect on the direction of JSW Holdings i.e., JSW Holdings and KEC International go up and down completely randomly.
Pair Corralation between JSW Holdings and KEC International
Assuming the 90 days trading horizon JSW Holdings Limited is expected to generate 1.2 times more return on investment than KEC International. However, JSW Holdings is 1.2 times more volatile than KEC International Limited. It trades about 0.1 of its potential returns per unit of risk. KEC International Limited is currently generating about 0.09 per unit of risk. If you would invest 441,660 in JSW Holdings Limited on September 23, 2024 and sell it today you would earn a total of 1,000,185 from holding JSW Holdings Limited or generate 226.46% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 99.8% |
Values | Daily Returns |
JSW Holdings Limited vs. KEC International Limited
Performance |
Timeline |
JSW Holdings Limited |
KEC International |
JSW Holdings and KEC International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with JSW Holdings and KEC International
The main advantage of trading using opposite JSW Holdings and KEC International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JSW Holdings position performs unexpectedly, KEC International 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 KEC International will offset losses from the drop in KEC International's long position.JSW Holdings vs. Servotech Power Systems | JSW Holdings vs. VA Tech Wabag | JSW Holdings vs. Kavveri Telecom Products | JSW Holdings vs. Agro Tech Foods |
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Check out your portfolio center.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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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