Correlation Between Pondy Oxides and JSW Holdings

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

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

Diversification Opportunities for Pondy Oxides and JSW Holdings

-0.49

Correlation Coefficient

Pondy Oxides  JSW Holdings

Very good diversification

The 3 months correlation between Pondy and JSW is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Pondy Oxides Chemicals and JSW Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JSW Holdings Limited and Pondy Oxides 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 Pondy Oxides Chemicals are associated (or correlated) with JSW Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JSW Holdings Limited has no effect on the direction of Pondy Oxides i.e., Pondy Oxides and JSW Holdings go up and down completely randomly.

Pair Corralation between Pondy Oxides and JSW Holdings

Assuming the 90 days trading horizon Pondy Oxides Chemicals is expected to under-perform the JSW Holdings. In addition to that, Pondy Oxides is 1.12 times more volatile than JSW Holdings Limited. It trades about -0.1 of its total potential returns per unit of risk. JSW Holdings Limited is currently generating about 0.22 per unit of volatility. If you would invest  1,461,575  in JSW Holdings Limited on December 30, 2024 and sell it today you would earn a total of  837,010  from holding JSW Holdings Limited or generate 57.27% return on investment over 90 days.

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

Pondy Oxides Chemicals  vs.  JSW Holdings Limited

Pondy Oxides Chemicals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pondy Oxides Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

JSW Holdings Limited

Risk-Adjusted Performance

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 uncertain basic indicators, JSW Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pondy Oxides and JSW Holdings

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

The idea behind Pondy Oxides Chemicals and JSW Holdings 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.