Correlation Between Rail Vikas and JSW Holdings

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

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

Diversification Opportunities for Rail Vikas and JSW Holdings

-0.68

Correlation Coefficient

Rail Vikas  JSW Holdings

Excellent diversification

The 3 months correlation between Rail and JSW is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Rail Vikas Nigam 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 Rail Vikas 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 Rail Vikas Nigam 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 Rail Vikas i.e., Rail Vikas and JSW Holdings go up and down completely randomly.

Pair Corralation between Rail Vikas and JSW Holdings

Assuming the 90 days trading horizon Rail Vikas Nigam is expected to generate 0.68 times more return on investment than JSW Holdings. However, Rail Vikas Nigam is 1.47 times less risky than JSW Holdings. It trades about -0.02 of its potential returns per unit of risk. JSW Holdings Limited is currently generating about -0.15 per unit of risk. If you would invest  43,810  in Rail Vikas Nigam on September 24, 2024 and sell it today you would lose (485.00) from holding Rail Vikas Nigam or give up 1.11% of portfolio value over 90 days.

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

Rail Vikas Nigam  vs.  JSW Holdings Limited

Rail Vikas Nigam

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rail Vikas Nigam 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 January 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

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JSW Holdings Limited are ranked lower than 13 (%) 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 Rail Vikas and JSW Holdings

The main advantage of trading using opposite Rail Vikas and JSW Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rail Vikas 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 Rail Vikas Nigam 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.