Correlation Between JSW Steel and Network18 Media

Can any of the company-specific risk be diversified away by investing in both JSW Steel and Network18 Media 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 Network18 Media 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 Network18 Media Investments, you can compare the effects of market volatilities on JSW Steel and Network18 Media 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 Network18 Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of JSW Steel and Network18 Media.

Diversification Opportunities for JSW Steel and Network18 Media

0.35

Correlation Coefficient

JSW Steel  Network18 Media

Weak diversification

The 3 months correlation between JSW and Network18 is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding JSW Steel Limited and Network18 Media Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Network18 Media Inve 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 Network18 Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Network18 Media Inve has no effect on the direction of JSW Steel i.e., JSW Steel and Network18 Media go up and down completely randomly.

Pair Corralation between JSW Steel and Network18 Media

Assuming the 90 days trading horizon JSW Steel Limited is expected to under-perform the Network18 Media. But the stock apears to be less risky and, when comparing its historical volatility, JSW Steel Limited is 2.1 times less risky than Network18 Media. The stock trades about 0.0 of its potential returns per unit of risk. The Network18 Media Investments is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  4,615  in Network18 Media Investments on April 24, 2025 and sell it today you would earn a total of  1,260  from holding Network18 Media Investments or generate 27.3% return on investment over 90 days.

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

JSW Steel Limited  vs.  Network18 Media Investments

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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Network18 Media Inve

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Network18 Media Investments are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady forward-looking signals, Network18 Media disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JSW Steel and Network18 Media

The main advantage of trading using opposite JSW Steel and Network18 Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JSW Steel position performs unexpectedly, Network18 Media 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 Network18 Media will offset losses from the drop in Network18 Media's long position.

The idea behind JSW Steel Limited and Network18 Media Investments 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.