Correlation Between Bajaj Holdings and Jayant Agro

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

By analyzing existing cross correlation between Bajaj Holdings Investment and Jayant Agro Organics, you can compare the effects of market volatilities on Bajaj Holdings and Jayant Agro 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 Bajaj Holdings with a short position of Jayant Agro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bajaj Holdings and Jayant Agro.

Diversification Opportunities for Bajaj Holdings and Jayant Agro

-0.07

Correlation Coefficient

Bajaj Holdings  Jayant Agro

Good diversification

The 3 months correlation between Bajaj and Jayant is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Bajaj Holdings Investment and Jayant Agro Organics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jayant Agro Organics and Bajaj Holdings 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 Bajaj Holdings Investment are associated (or correlated) with Jayant Agro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jayant Agro Organics has no effect on the direction of Bajaj Holdings i.e., Bajaj Holdings and Jayant Agro go up and down completely randomly.

Pair Corralation between Bajaj Holdings and Jayant Agro

Assuming the 90 days trading horizon Bajaj Holdings Investment is expected to generate 0.74 times more return on investment than Jayant Agro. However, Bajaj Holdings Investment is 1.35 times less risky than Jayant Agro. It trades about 0.09 of its potential returns per unit of risk. Jayant Agro Organics is currently generating about 0.04 per unit of risk. If you would invest  543,445  in Bajaj Holdings Investment on October 11, 2024 and sell it today you would earn a total of  573,445  from holding Bajaj Holdings Investment or generate 105.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Bajaj Holdings Investment  vs.  Jayant Agro Organics

Bajaj Holdings Investment

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bajaj Holdings Investment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Bajaj Holdings is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Jayant Agro Organics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jayant Agro Organics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Jayant Agro is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Bajaj Holdings and Jayant Agro

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

The idea behind Bajaj Holdings Investment and Jayant Agro Organics 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.