Correlation Between Varroc Engineering and JSW Holdings

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

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

Diversification Opportunities for Varroc Engineering and JSW Holdings

-0.66

Correlation Coefficient

Varroc Engineering  JSW Holdings

Excellent diversification

The 3 months correlation between Varroc and JSW is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Varroc Engineering Limited and JSW Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JSW Holdings Limited and Varroc Engineering 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 Varroc Engineering Limited are associated (or correlated) with JSW Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JSW Holdings Limited has no effect on the direction of Varroc Engineering i.e., Varroc Engineering and JSW Holdings go up and down completely randomly.

Pair Corralation between Varroc Engineering and JSW Holdings

Assuming the 90 days trading horizon Varroc Engineering Limited is expected to generate 0.89 times more return on investment than JSW Holdings. However, Varroc Engineering Limited is 1.13 times less risky than JSW Holdings. It trades about 0.2 of its potential returns per unit of risk. JSW Holdings Limited is currently generating about -0.11 per unit of risk. If you would invest  43,845  in Varroc Engineering Limited on April 20, 2025 and sell it today you would earn a total of  12,080  from holding Varroc Engineering Limited or generate 27.55% return on investment over 90 days.

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

Varroc Engineering Limited  vs.  JSW Holdings Limited

Varroc Engineering

Risk-Adjusted Performance

Solid

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

JSW Holdings Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days JSW Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in August 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Varroc Engineering and JSW Holdings

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

The idea behind Varroc Engineering Limited and JSW Holdings 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.