Correlation Between JSW Holdings and Zydus Wellness

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

Diversification Opportunities for JSW Holdings and Zydus Wellness

0.18

Correlation Coefficient

JSW Holdings  Zydus Wellness

Average diversification

The 3 months correlation between JSW and Zydus is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding JSW Holdings Limited and Zydus Wellness Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zydus Wellness 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 Zydus Wellness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zydus Wellness has no effect on the direction of JSW Holdings i.e., JSW Holdings and Zydus Wellness go up and down completely randomly.

Pair Corralation between JSW Holdings and Zydus Wellness

Assuming the 90 days trading horizon JSW Holdings Limited is expected to generate 2.93 times more return on investment than Zydus Wellness. However, JSW Holdings is 2.93 times more volatile than Zydus Wellness Limited. It trades about 0.22 of its potential returns per unit of risk. Zydus Wellness Limited is currently generating about 0.02 per unit of risk. If you would invest  1,012,195  in JSW Holdings Limited on October 23, 2024 and sell it today you would earn a total of  822,860  from holding JSW Holdings Limited or generate 81.29% return on investment over 90 days.

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

JSW Holdings Limited  vs.  Zydus Wellness 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 unsteady basic indicators, JSW Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Zydus Wellness

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zydus Wellness Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Zydus Wellness is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with JSW Holdings and Zydus Wellness

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

The idea behind JSW Holdings Limited and Zydus Wellness 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 CEOs Directory module to screen CEOs from public companies around the world.