Correlation Between Vedanta and Jindal Stainless

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

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

Diversification Opportunities for Vedanta and Jindal Stainless

0.0

Correlation Coefficient

Vedanta  Jindal Stainless

Pay attention - limited upside

The 3 months correlation between Vedanta and Jindal is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Vedanta Limited and Jindal Stainless Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jindal Stainless and Vedanta 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 Vedanta Limited are associated (or correlated) with Jindal Stainless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jindal Stainless has no effect on the direction of Vedanta i.e., Vedanta and Jindal Stainless go up and down completely randomly.

Pair Corralation between Vedanta and Jindal Stainless

If you would invest  43,965  in Vedanta Limited on December 29, 2024 and sell it today you would earn a total of  2,375  from holding Vedanta Limited or generate 5.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Vedanta Limited  vs.  Jindal Stainless Limited

Vedanta Limited

Risk-Adjusted Performance

Insignificant

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

Jindal Stainless

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jindal Stainless Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Jindal Stainless is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Vedanta and Jindal Stainless

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

The idea behind Vedanta Limited and Jindal Stainless 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.