Correlation Between JSW Steel and HT Media

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

Diversification Opportunities for JSW Steel and HT Media

-0.68

Correlation Coefficient

JSW Steel  HT Media

Excellent diversification

The 3 months correlation between JSW and HTMEDIA is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding JSW Steel Limited and HT Media Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HT Media Limited 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 HT Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HT Media Limited has no effect on the direction of JSW Steel i.e., JSW Steel and HT Media go up and down completely randomly.

Pair Corralation between JSW Steel and HT Media

Assuming the 90 days trading horizon JSW Steel Limited is expected to generate 0.38 times more return on investment than HT Media. However, JSW Steel Limited is 2.6 times less risky than HT Media. It trades about 0.2 of its potential returns per unit of risk. HT Media Limited is currently generating about -0.11 per unit of risk. If you would invest  91,445  in JSW Steel Limited on December 26, 2024 and sell it today you would earn a total of  14,725  from holding JSW Steel Limited or generate 16.1% return on investment over 90 days.

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

JSW Steel Limited  vs.  HT Media Limited

JSW Steel Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JSW Steel Limited are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, JSW Steel exhibited solid returns over the last few months and may actually be approaching a breakup point.

HT Media Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days HT Media Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with JSW Steel and HT Media

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

The idea behind JSW Steel Limited and HT Media 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.