Correlation Between JSW Holdings and Mindteck

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

Diversification Opportunities for JSW Holdings and Mindteck

-0.4

Correlation Coefficient

JSW Holdings  Mindteck

Very good diversification

The 3 months correlation between JSW and Mindteck is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding JSW Holdings Limited and Mindteck Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mindteck 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 Mindteck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mindteck Limited has no effect on the direction of JSW Holdings i.e., JSW Holdings and Mindteck go up and down completely randomly.

Pair Corralation between JSW Holdings and Mindteck

Assuming the 90 days trading horizon JSW Holdings Limited is expected to generate 1.46 times more return on investment than Mindteck. However, JSW Holdings is 1.46 times more volatile than Mindteck Limited. It trades about 0.23 of its potential returns per unit of risk. Mindteck Limited is currently generating about -0.05 per unit of risk. If you would invest  777,955  in JSW Holdings Limited on September 16, 2024 and sell it today you would earn a total of  736,410  from holding JSW Holdings Limited or generate 94.66% return on investment over 90 days.

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

JSW Holdings Limited  vs.  Mindteck Limited

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

Mindteck Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mindteck Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with JSW Holdings and Mindteck

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

The idea behind JSW Holdings Limited and Mindteck 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.