Correlation Between Avonmore Capital and Jai Balaji

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

By analyzing existing cross correlation between Avonmore Capital Management and Jai Balaji Industries, you can compare the effects of market volatilities on Avonmore Capital and Jai Balaji 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 Avonmore Capital with a short position of Jai Balaji. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avonmore Capital and Jai Balaji.

Diversification Opportunities for Avonmore Capital and Jai Balaji

-0.23

Correlation Coefficient

Avonmore Capital  Jai Balaji

Very good diversification

The 3 months correlation between Avonmore and Jai is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Avonmore Capital Management and Jai Balaji Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jai Balaji Industries and Avonmore Capital 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 Avonmore Capital Management are associated (or correlated) with Jai Balaji. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jai Balaji Industries has no effect on the direction of Avonmore Capital i.e., Avonmore Capital and Jai Balaji go up and down completely randomly.

Pair Corralation between Avonmore Capital and Jai Balaji

Assuming the 90 days trading horizon Avonmore Capital is expected to generate 6.23 times less return on investment than Jai Balaji. But when comparing it to its historical volatility, Avonmore Capital Management is 10.18 times less risky than Jai Balaji. It trades about 0.15 of its potential returns per unit of risk. Jai Balaji Industries is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  21,007  in Jai Balaji Industries on October 22, 2024 and sell it today you would lose (4,287) from holding Jai Balaji Industries or give up 20.41% of portfolio value over 90 days.

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

Avonmore Capital Management  vs.  Jai Balaji Industries

Avonmore Capital Man

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Avonmore Capital Management are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Avonmore Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Jai Balaji Industries

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jai Balaji Industries are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Jai Balaji sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Avonmore Capital and Jai Balaji

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

The idea behind Avonmore Capital Management and Jai Balaji Industries 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.