Correlation Between Dhanuka Agritech and Jindal Stainless

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

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

Diversification Opportunities for Dhanuka Agritech and Jindal Stainless

0.88

Correlation Coefficient

Dhanuka Agritech  Jindal Stainless

Very poor diversification

The 3 months correlation between Dhanuka and Jindal is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Dhanuka Agritech 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 Dhanuka Agritech 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 Dhanuka Agritech 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 Dhanuka Agritech i.e., Dhanuka Agritech and Jindal Stainless go up and down completely randomly.

Pair Corralation between Dhanuka Agritech and Jindal Stainless

Assuming the 90 days trading horizon Dhanuka Agritech Limited is expected to generate 1.24 times more return on investment than Jindal Stainless. However, Dhanuka Agritech is 1.24 times more volatile than Jindal Stainless Limited. It trades about 0.19 of its potential returns per unit of risk. Jindal Stainless Limited is currently generating about 0.17 per unit of risk. If you would invest  130,833  in Dhanuka Agritech Limited on April 25, 2025 and sell it today you would earn a total of  40,567  from holding Dhanuka Agritech Limited or generate 31.01% return on investment over 90 days.

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

Dhanuka Agritech Limited  vs.  Jindal Stainless Limited

Dhanuka Agritech

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dhanuka Agritech Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Dhanuka Agritech sustained solid returns over the last few months and may actually be approaching a breakup point.

Jindal Stainless

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jindal Stainless Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Jindal Stainless exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dhanuka Agritech and Jindal Stainless

The main advantage of trading using opposite Dhanuka Agritech and Jindal Stainless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dhanuka Agritech 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 Dhanuka Agritech 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.