Correlation Between Incar Financial and JC Chemical

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

By analyzing existing cross correlation between Incar Financial Service and JC Chemical Co, you can compare the effects of market volatilities on Incar Financial and JC Chemical 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 Incar Financial with a short position of JC Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Incar Financial and JC Chemical.

Diversification Opportunities for Incar Financial and JC Chemical

-0.84

Correlation Coefficient

Incar Financial  JC Chemical

Pay attention - limited upside

The 3 months correlation between Incar and 137950 is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Incar Financial Service and JC Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JC Chemical and Incar Financial 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 Incar Financial Service are associated (or correlated) with JC Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JC Chemical has no effect on the direction of Incar Financial i.e., Incar Financial and JC Chemical go up and down completely randomly.

Pair Corralation between Incar Financial and JC Chemical

Assuming the 90 days trading horizon Incar Financial Service is expected to under-perform the JC Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Incar Financial Service is 1.02 times less risky than JC Chemical. The stock trades about -0.12 of its potential returns per unit of risk. The JC Chemical Co is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  419,500  in JC Chemical Co on September 20, 2024 and sell it today you would lose (18,000) from holding JC Chemical Co or give up 4.29% of portfolio value over 90 days.

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

Incar Financial Service  vs.  JC Chemical Co

Incar Financial Service

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Incar Financial Service are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Incar Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

JC Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JC Chemical Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Incar Financial and JC Chemical

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

The idea behind Incar Financial Service and JC Chemical Co 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.