Correlation Between Bawany Air and JS Investments

Can any of the company-specific risk be diversified away by investing in both Bawany Air and JS Investments 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 Bawany Air and JS Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bawany Air Products and JS Investments, you can compare the effects of market volatilities on Bawany Air and JS Investments 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 Bawany Air with a short position of JS Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bawany Air and JS Investments.

Diversification Opportunities for Bawany Air and JS Investments

0.41

Correlation Coefficient

Bawany Air  JS Investments

Very weak diversification

The 3 months correlation between Bawany and JSIL is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Bawany Air Products and JS Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JS Investments and Bawany Air 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 Bawany Air Products are associated (or correlated) with JS Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JS Investments has no effect on the direction of Bawany Air i.e., Bawany Air and JS Investments go up and down completely randomly.

Pair Corralation between Bawany Air and JS Investments

Assuming the 90 days trading horizon Bawany Air Products is expected to under-perform the JS Investments. But the stock apears to be less risky and, when comparing its historical volatility, Bawany Air Products is 1.57 times less risky than JS Investments. The stock trades about -0.13 of its potential returns per unit of risk. The JS Investments is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  2,472  in JS Investments on October 23, 2024 and sell it today you would lose (132.00) from holding JS Investments or give up 5.34% of portfolio value over 90 days.

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

Bawany Air Products  vs.  JS Investments

Bawany Air Products

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bawany Air Products are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bawany Air may actually be approaching a critical reversion point that can send shares even higher in February 2025.

JS Investments

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JS Investments are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, JS Investments may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Bawany Air and JS Investments

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

The idea behind Bawany Air Products and JS Investments 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.