Correlation Between Can Fin and Jai Balaji

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

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

Diversification Opportunities for Can Fin and Jai Balaji

0.22

Correlation Coefficient

Can Fin  Jai Balaji

Modest diversification

The 3 months correlation between Can and Jai is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Can Fin Homes 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 Can Fin 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 Can Fin Homes 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 Can Fin i.e., Can Fin and Jai Balaji go up and down completely randomly.

Pair Corralation between Can Fin and Jai Balaji

Assuming the 90 days trading horizon Can Fin is expected to generate 21.45 times less return on investment than Jai Balaji. But when comparing it to its historical volatility, Can Fin Homes is 9.52 times less risky than Jai Balaji. It trades about 0.03 of its potential returns per unit of risk. Jai Balaji Industries is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,013  in Jai Balaji Industries on October 25, 2024 and sell it today you would earn a total of  14,432  from holding Jai Balaji Industries or generate 1424.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.18%
Values	Daily Returns

Can Fin Homes  vs.  Jai Balaji Industries

Can Fin Homes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Can Fin Homes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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 weak basic indicators, Jai Balaji sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Can Fin and Jai Balaji

The main advantage of trading using opposite Can Fin and Jai Balaji positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Can Fin 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 Can Fin Homes 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.