Correlation Between JSW Holdings and Next Mediaworks

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

Diversification Opportunities for JSW Holdings and Next Mediaworks

0.23
  Correlation Coefficient

Modest diversification

The 3 months correlation between JSW and Next is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding JSW Holdings Limited and Next Mediaworks Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Mediaworks 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 Next Mediaworks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Mediaworks has no effect on the direction of JSW Holdings i.e., JSW Holdings and Next Mediaworks go up and down completely randomly.

Pair Corralation between JSW Holdings and Next Mediaworks

Assuming the 90 days trading horizon JSW Holdings Limited is expected to generate 1.06 times more return on investment than Next Mediaworks. However, JSW Holdings is 1.06 times more volatile than Next Mediaworks Limited. It trades about 0.23 of its potential returns per unit of risk. Next Mediaworks Limited is currently generating about 0.04 per unit of risk. If you would invest  985,020  in JSW Holdings Limited on October 24, 2024 and sell it today you would earn a total of  875,835  from holding JSW Holdings Limited or generate 88.92% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

JSW Holdings Limited  vs.  Next Mediaworks Limited

 Performance 
       Timeline  
JSW Holdings Limited 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in JSW Holdings Limited are ranked lower than 18 (%) 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.
Next Mediaworks 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Next Mediaworks Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Next Mediaworks may actually be approaching a critical reversion point that can send shares even higher in February 2025.

JSW Holdings and Next Mediaworks Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JSW Holdings and Next Mediaworks

The main advantage of trading using opposite JSW Holdings and Next Mediaworks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JSW Holdings position performs unexpectedly, Next Mediaworks 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 Next Mediaworks will offset losses from the drop in Next Mediaworks' long position.
The idea behind JSW Holdings Limited and Next Mediaworks 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.
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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