Correlation Between APL Apollo and Jindal Steel

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

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

Diversification Opportunities for APL Apollo and Jindal Steel

0.59

Correlation Coefficient

APL Apollo  Jindal Steel

Very weak diversification

The 3 months correlation between APL and Jindal is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding APL Apollo Tubes 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 APL Apollo 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 APL Apollo Tubes 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 APL Apollo i.e., APL Apollo and Jindal Steel go up and down completely randomly.

Pair Corralation between APL Apollo and Jindal Steel

Assuming the 90 days trading horizon APL Apollo is expected to generate 1.22 times less return on investment than Jindal Steel. But when comparing it to its historical volatility, APL Apollo Tubes is 1.28 times less risky than Jindal Steel. It trades about 0.06 of its potential returns per unit of risk. Jindal Steel Power is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  91,525  in Jindal Steel Power on April 23, 2025 and sell it today you would earn a total of  4,480  from holding Jindal Steel Power or generate 4.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

APL Apollo Tubes  vs.  Jindal Steel Power

APL Apollo Tubes

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in APL Apollo Tubes are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, APL Apollo is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Jindal Steel Power

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jindal Steel Power are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Jindal Steel is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with APL Apollo and Jindal Steel

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

Check out your portfolio center.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.