Correlation Between SILVERADD and Jindal Stainless

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

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

Diversification Opportunities for SILVERADD and Jindal Stainless

0.75

Correlation Coefficient

SILVERADD  Jindal Stainless

Poor diversification

The 3 months correlation between SILVERADD and Jindal is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding SILVERADD and Jindal Stainless Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jindal Stainless and SILVERADD 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 SILVERADD 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 SILVERADD i.e., SILVERADD and Jindal Stainless go up and down completely randomly.

Pair Corralation between SILVERADD and Jindal Stainless

Assuming the 90 days trading horizon SILVERADD is expected to generate 1.15 times less return on investment than Jindal Stainless. But when comparing it to its historical volatility, SILVERADD is 1.5 times less risky than Jindal Stainless. It trades about 0.2 of its potential returns per unit of risk. Jindal Stainless Limited is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  57,250  in Jindal Stainless Limited on April 24, 2025 and sell it today you would earn a total of  11,640  from holding Jindal Stainless Limited or generate 20.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

SILVERADD  vs.  Jindal Stainless Limited

SILVERADD

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SILVERADD are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SILVERADD sustained solid returns over the last few months and may actually be approaching a breakup point.

Jindal Stainless

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jindal Stainless Limited are ranked lower than 12 (%) 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 SILVERADD and Jindal Stainless

The main advantage of trading using opposite SILVERADD and Jindal Stainless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SILVERADD 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 SILVERADD 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.