Correlation Between Shivalik Bimetal and Jindal Steel

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

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

Diversification Opportunities for Shivalik Bimetal and Jindal Steel

0.45

Correlation Coefficient

Shivalik Bimetal  Jindal Steel

Very weak diversification

The 3 months correlation between Shivalik and Jindal is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Shivalik Bimetal Controls 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 Shivalik Bimetal 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 Shivalik Bimetal Controls 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 Shivalik Bimetal i.e., Shivalik Bimetal and Jindal Steel go up and down completely randomly.

Pair Corralation between Shivalik Bimetal and Jindal Steel

Assuming the 90 days trading horizon Shivalik Bimetal Controls is expected to generate 1.23 times more return on investment than Jindal Steel. However, Shivalik Bimetal is 1.23 times more volatile than Jindal Steel Power. It trades about 0.05 of its potential returns per unit of risk. Jindal Steel Power is currently generating about 0.02 per unit of risk. If you would invest  56,600  in Shivalik Bimetal Controls on October 4, 2024 and sell it today you would earn a total of  945.00  from holding Shivalik Bimetal Controls or generate 1.67% return on investment over 90 days.

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

Shivalik Bimetal Controls  vs.  Jindal Steel Power

Shivalik Bimetal Controls

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shivalik Bimetal Controls has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady 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.

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 Shivalik Bimetal and Jindal Steel

The main advantage of trading using opposite Shivalik Bimetal and Jindal Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shivalik Bimetal 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 Shivalik Bimetal Controls 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.