Correlation Between JSW Steel and Amrutanjan Health

Can any of the company-specific risk be diversified away by investing in both JSW Steel and Amrutanjan Health 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 Steel and Amrutanjan Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JSW Steel Limited and Amrutanjan Health Care, you can compare the effects of market volatilities on JSW Steel and Amrutanjan Health 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 Steel with a short position of Amrutanjan Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of JSW Steel and Amrutanjan Health.

Diversification Opportunities for JSW Steel and Amrutanjan Health

0.44

Correlation Coefficient

JSW Steel  Amrutanjan Health

Very weak diversification

The 3 months correlation between JSW and Amrutanjan is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding JSW Steel Limited and Amrutanjan Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amrutanjan Health Care and JSW Steel 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 Steel Limited are associated (or correlated) with Amrutanjan Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amrutanjan Health Care has no effect on the direction of JSW Steel i.e., JSW Steel and Amrutanjan Health go up and down completely randomly.

Pair Corralation between JSW Steel and Amrutanjan Health

Assuming the 90 days trading horizon JSW Steel Limited is expected to under-perform the Amrutanjan Health. But the stock apears to be less risky and, when comparing its historical volatility, JSW Steel Limited is 1.19 times less risky than Amrutanjan Health. The stock trades about -0.11 of its potential returns per unit of risk. The Amrutanjan Health Care is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  74,190  in Amrutanjan Health Care on October 7, 2024 and sell it today you would lose (1,805) from holding Amrutanjan Health Care or give up 2.43% of portfolio value over 90 days.

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

JSW Steel Limited  vs.  Amrutanjan Health Care

JSW Steel Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JSW Steel 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.

Amrutanjan Health Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amrutanjan Health Care has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking indicators, Amrutanjan Health is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with JSW Steel and Amrutanjan Health

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

The idea behind JSW Steel Limited and Amrutanjan Health Care 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.