Correlation Between Prakash Steelage and Jindal Steel

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

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

Diversification Opportunities for Prakash Steelage and Jindal Steel

-0.07

Correlation Coefficient

Prakash Steelage  Jindal Steel

Good diversification

The 3 months correlation between Prakash and Jindal is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Prakash Steelage Limited and Jindal Steel Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jindal Steel Power and Prakash Steelage 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 Prakash Steelage Limited are associated (or correlated) with Jindal Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jindal Steel Power has no effect on the direction of Prakash Steelage i.e., Prakash Steelage and Jindal Steel go up and down completely randomly.

Pair Corralation between Prakash Steelage and Jindal Steel

Assuming the 90 days trading horizon Prakash Steelage Limited is expected to under-perform the Jindal Steel. But the stock apears to be less risky and, when comparing its historical volatility, Prakash Steelage Limited is 1.15 times less risky than Jindal Steel. The stock trades about -0.14 of its potential returns per unit of risk. The Jindal Steel Power is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  91,500  in Jindal Steel Power on April 22, 2025 and sell it today you would earn a total of  4,215  from holding Jindal Steel Power or generate 4.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Prakash Steelage Limited  vs.  Jindal Steel Power

Prakash Steelage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prakash Steelage Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in August 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Jindal Steel Power

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jindal Steel Power are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Jindal Steel is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Prakash Steelage and Jindal Steel

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

The idea behind Prakash Steelage Limited and Jindal Steel Power 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.