Correlation Between Meghmani Organics and Jindal Stainless

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

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

Diversification Opportunities for Meghmani Organics and Jindal Stainless

0.84

Correlation Coefficient

Meghmani Organics  Jindal Stainless

Very poor diversification

The 3 months correlation between Meghmani and Jindal is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Meghmani Organics 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 Meghmani Organics 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 Meghmani Organics 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 Meghmani Organics i.e., Meghmani Organics and Jindal Stainless go up and down completely randomly.

Pair Corralation between Meghmani Organics and Jindal Stainless

Assuming the 90 days trading horizon Meghmani Organics Limited is expected to generate 1.29 times more return on investment than Jindal Stainless. However, Meghmani Organics is 1.29 times more volatile than Jindal Stainless Limited. It trades about 0.26 of its potential returns per unit of risk. Jindal Stainless Limited is currently generating about 0.11 per unit of risk. If you would invest  6,139  in Meghmani Organics Limited on March 28, 2025 and sell it today you would earn a total of  3,639  from holding Meghmani Organics Limited or generate 59.28% return on investment over 90 days.

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

Meghmani Organics Limited  vs.  Jindal Stainless Limited

Meghmani Organics

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Meghmani Organics Limited are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Meghmani Organics exhibited 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 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain 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 Meghmani Organics and Jindal Stainless

The main advantage of trading using opposite Meghmani Organics and Jindal Stainless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meghmani Organics 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 Meghmani Organics 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.