Correlation Between Praj Industries and Jindal Drilling

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

By analyzing existing cross correlation between Praj Industries Limited and Jindal Drilling And, you can compare the effects of market volatilities on Praj Industries and Jindal Drilling 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 Praj Industries with a short position of Jindal Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Praj Industries and Jindal Drilling.

Diversification Opportunities for Praj Industries and Jindal Drilling

0.39

Correlation Coefficient

Praj Industries  Jindal Drilling

Weak diversification

The 3 months correlation between Praj and Jindal is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Praj Industries Limited and Jindal Drilling And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jindal Drilling And and Praj Industries 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 Praj Industries Limited are associated (or correlated) with Jindal Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jindal Drilling And has no effect on the direction of Praj Industries i.e., Praj Industries and Jindal Drilling go up and down completely randomly.

Pair Corralation between Praj Industries and Jindal Drilling

Assuming the 90 days trading horizon Praj Industries Limited is expected to generate 0.68 times more return on investment than Jindal Drilling. However, Praj Industries Limited is 1.47 times less risky than Jindal Drilling. It trades about 0.04 of its potential returns per unit of risk. Jindal Drilling And is currently generating about -0.04 per unit of risk. If you would invest  80,835  in Praj Industries Limited on October 9, 2024 and sell it today you would earn a total of  920.00  from holding Praj Industries Limited or generate 1.14% return on investment over 90 days.

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

Praj Industries Limited  vs.  Jindal Drilling And

Praj Industries

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Praj Industries Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward indicators, Praj Industries may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Jindal Drilling And

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jindal Drilling And are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating forward indicators, Jindal Drilling disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Praj Industries and Jindal Drilling

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

The idea behind Praj Industries Limited and Jindal Drilling And 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.