Correlation Between Aster DM and JB Chemicals

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

By analyzing existing cross correlation between Aster DM Healthcare and JB Chemicals Pharmaceuticals, you can compare the effects of market volatilities on Aster DM and JB Chemicals 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 Aster DM with a short position of JB Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aster DM and JB Chemicals.

Diversification Opportunities for Aster DM and JB Chemicals

0.05

Correlation Coefficient

Aster DM  JB Chemicals

Significant diversification

The 3 months correlation between Aster and JBCHEPHARM is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Aster DM Healthcare and JB Chemicals Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JB Chemicals Pharmac and Aster DM 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 Aster DM Healthcare are associated (or correlated) with JB Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JB Chemicals Pharmac has no effect on the direction of Aster DM i.e., Aster DM and JB Chemicals go up and down completely randomly.

Pair Corralation between Aster DM and JB Chemicals

Assuming the 90 days trading horizon Aster DM Healthcare is expected to generate 1.09 times more return on investment than JB Chemicals. However, Aster DM is 1.09 times more volatile than JB Chemicals Pharmaceuticals. It trades about 0.1 of its potential returns per unit of risk. JB Chemicals Pharmaceuticals is currently generating about 0.03 per unit of risk. If you would invest  37,407  in Aster DM Healthcare on October 9, 2024 and sell it today you would earn a total of  14,678  from holding Aster DM Healthcare or generate 39.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.46%
Values	Daily Returns

Aster DM Healthcare  vs.  JB Chemicals Pharmaceuticals

Aster DM Healthcare

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aster DM Healthcare are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Aster DM displayed solid returns over the last few months and may actually be approaching a breakup point.

JB Chemicals Pharmac

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JB Chemicals Pharmaceuticals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, JB Chemicals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Aster DM and JB Chemicals

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

The idea behind Aster DM Healthcare and JB Chemicals Pharmaceuticals 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.