Correlation Between JSW Holdings and Man Infraconstructio

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

Diversification Opportunities for JSW Holdings and Man Infraconstructio

0.3

Correlation Coefficient

JSW Holdings  Man Infraconstructio

Weak diversification

The 3 months correlation between JSW and Man is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding JSW Holdings Limited and Man Infraconstruction Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Man Infraconstruction 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 Man Infraconstructio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Man Infraconstruction has no effect on the direction of JSW Holdings i.e., JSW Holdings and Man Infraconstructio go up and down completely randomly.

Pair Corralation between JSW Holdings and Man Infraconstructio

Assuming the 90 days trading horizon JSW Holdings Limited is expected to under-perform the Man Infraconstructio. But the stock apears to be less risky and, when comparing its historical volatility, JSW Holdings Limited is 1.13 times less risky than Man Infraconstructio. The stock trades about -0.17 of its potential returns per unit of risk. The Man Infraconstruction Limited is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  19,465  in Man Infraconstruction Limited on September 25, 2024 and sell it today you would earn a total of  3,829  from holding Man Infraconstruction Limited or generate 19.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

JSW Holdings Limited  vs.  Man Infraconstruction Limited

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.

Man Infraconstruction

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Man Infraconstruction Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady technical and fundamental indicators, Man Infraconstructio reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JSW Holdings and Man Infraconstructio

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

The idea behind JSW Holdings Limited and Man Infraconstruction 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.