Correlation Between Network18 Media and Jindal Poly

Can any of the company-specific risk be diversified away by investing in both Network18 Media and Jindal Poly 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 Network18 Media and Jindal Poly into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Network18 Media Investments and Jindal Poly Investment, you can compare the effects of market volatilities on Network18 Media and Jindal Poly 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 Network18 Media with a short position of Jindal Poly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Network18 Media and Jindal Poly.

Diversification Opportunities for Network18 Media and Jindal Poly

-0.27

Correlation Coefficient

Network18 Media  Jindal Poly

Very good diversification

The 3 months correlation between Network18 and Jindal is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Network18 Media Investments and Jindal Poly Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jindal Poly Investment and Network18 Media 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 Network18 Media Investments are associated (or correlated) with Jindal Poly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jindal Poly Investment has no effect on the direction of Network18 Media i.e., Network18 Media and Jindal Poly go up and down completely randomly.

Pair Corralation between Network18 Media and Jindal Poly

Assuming the 90 days trading horizon Network18 Media Investments is expected to under-perform the Jindal Poly. In addition to that, Network18 Media is 1.06 times more volatile than Jindal Poly Investment. It trades about -0.25 of its total potential returns per unit of risk. Jindal Poly Investment is currently generating about -0.24 per unit of volatility. If you would invest  102,675  in Jindal Poly Investment on September 22, 2024 and sell it today you would lose (11,175) from holding Jindal Poly Investment or give up 10.88% of portfolio value over 90 days.

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

Network18 Media Investments  vs.  Jindal Poly Investment

Network18 Media Inve

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Network18 Media Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Jindal Poly Investment

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jindal Poly Investment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Jindal Poly displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Network18 Media and Jindal Poly

The main advantage of trading using opposite Network18 Media and Jindal Poly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Network18 Media position performs unexpectedly, Jindal Poly 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 Jindal Poly will offset losses from the drop in Jindal Poly's long position.

The idea behind Network18 Media Investments and Jindal Poly Investment 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.