Correlation Between JSW Steel and Avonmore Capital

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

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

Diversification Opportunities for JSW Steel and Avonmore Capital

-0.1

Correlation Coefficient

JSW Steel  Avonmore Capital

Good diversification

The 3 months correlation between JSW and Avonmore is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding JSW Steel Limited and Avonmore Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avonmore Capital Man and JSW Steel 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 Steel Limited are associated (or correlated) with Avonmore Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avonmore Capital Man has no effect on the direction of JSW Steel i.e., JSW Steel and Avonmore Capital go up and down completely randomly.

Pair Corralation between JSW Steel and Avonmore Capital

Assuming the 90 days trading horizon JSW Steel is expected to generate 3.89 times less return on investment than Avonmore Capital. But when comparing it to its historical volatility, JSW Steel Limited is 2.14 times less risky than Avonmore Capital. It trades about 0.04 of its potential returns per unit of risk. Avonmore Capital Management is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  793.00  in Avonmore Capital Management on April 2, 2025 and sell it today you would earn a total of  1,174  from holding Avonmore Capital Management or generate 148.05% return on investment over 90 days.

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

JSW Steel Limited  vs.  Avonmore Capital Management

JSW Steel Limited

Risk-Adjusted Performance

Very Weak

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

Avonmore Capital Man

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Avonmore Capital Management are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Avonmore Capital may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with JSW Steel and Avonmore Capital

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

The idea behind JSW Steel Limited and Avonmore Capital Management 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..