Correlation Between JSW Holdings and Home First

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

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

Diversification Opportunities for JSW Holdings and Home First

-0.53

Correlation Coefficient

JSW Holdings  Home First

Excellent diversification

The 3 months correlation between JSW and Home is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding JSW Holdings Limited and Home First Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home First Finance and JSW Holdings 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 JSW Holdings Limited are associated (or correlated) with Home First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home First Finance has no effect on the direction of JSW Holdings i.e., JSW Holdings and Home First go up and down completely randomly.

Pair Corralation between JSW Holdings and Home First

Assuming the 90 days trading horizon JSW Holdings Limited is expected to under-perform the Home First. But the stock apears to be less risky and, when comparing its historical volatility, JSW Holdings Limited is 1.03 times less risky than Home First. The stock trades about -0.1 of its potential returns per unit of risk. The Home First Finance is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  129,709  in Home First Finance on April 23, 2025 and sell it today you would earn a total of  7,731  from holding Home First Finance or generate 5.96% return on investment over 90 days.

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

JSW Holdings Limited  vs.  Home First Finance

JSW Holdings Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days JSW Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in August 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Home First Finance

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Home First Finance are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Home First may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with JSW Holdings and Home First

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

The idea behind JSW Holdings Limited and Home First Finance 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.