Correlation Between Generic Engineering and Jindal Stainless

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

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

Diversification Opportunities for Generic Engineering and Jindal Stainless

0.88

Correlation Coefficient

Generic Engineering  Jindal Stainless

Very poor diversification

The 3 months correlation between Generic and Jindal is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Generic Engineering Constructi and Jindal Stainless Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jindal Stainless and Generic Engineering 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 Generic Engineering Construction 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 Generic Engineering i.e., Generic Engineering and Jindal Stainless go up and down completely randomly.

Pair Corralation between Generic Engineering and Jindal Stainless

Assuming the 90 days trading horizon Generic Engineering Construction is expected to generate 1.89 times more return on investment than Jindal Stainless. However, Generic Engineering is 1.89 times more volatile than Jindal Stainless Limited. It trades about 0.08 of its potential returns per unit of risk. Jindal Stainless Limited is currently generating about 0.14 per unit of risk. If you would invest  3,464  in Generic Engineering Construction on April 24, 2025 and sell it today you would earn a total of  549.00  from holding Generic Engineering Construction or generate 15.85% return on investment over 90 days.

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

Generic Engineering Constructi  vs.  Jindal Stainless Limited

Generic Engineering

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Generic Engineering Construction are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent fundamental indicators, Generic Engineering sustained solid returns over the last few months and may actually be approaching a breakup point.

Jindal Stainless

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jindal Stainless Limited are ranked lower than 10 (%) 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 Generic Engineering and Jindal Stainless

The main advantage of trading using opposite Generic Engineering and Jindal Stainless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Generic Engineering 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 Generic Engineering Construction 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..