Correlation Between Samhi Hotels and Jindal Steel

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

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

Diversification Opportunities for Samhi Hotels and Jindal Steel

0.73

Correlation Coefficient

Samhi Hotels  Jindal Steel

Poor diversification

The 3 months correlation between Samhi and Jindal is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Samhi Hotels Limited and Jindal Steel Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jindal Steel Power and Samhi Hotels 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 Samhi Hotels Limited are associated (or correlated) with Jindal Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jindal Steel Power has no effect on the direction of Samhi Hotels i.e., Samhi Hotels and Jindal Steel go up and down completely randomly.

Pair Corralation between Samhi Hotels and Jindal Steel

Assuming the 90 days trading horizon Samhi Hotels Limited is expected to generate 1.15 times more return on investment than Jindal Steel. However, Samhi Hotels is 1.15 times more volatile than Jindal Steel Power. It trades about 0.02 of its potential returns per unit of risk. Jindal Steel Power is currently generating about -0.05 per unit of risk. If you would invest  19,027  in Samhi Hotels Limited on September 30, 2024 and sell it today you would earn a total of  640.00  from holding Samhi Hotels Limited or generate 3.36% return on investment over 90 days.

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

Samhi Hotels Limited  vs.  Jindal Steel Power

Samhi Hotels Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samhi Hotels Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Samhi Hotels is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Jindal Steel Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jindal Steel Power has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Samhi Hotels and Jindal Steel

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

The idea behind Samhi Hotels Limited and Jindal Steel Power 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.