Correlation Between Chemcon Speciality and JGCHEMICALS

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

By analyzing existing cross correlation between Chemcon Speciality Chemicals and JGCHEMICALS LIMITED, you can compare the effects of market volatilities on Chemcon Speciality and JGCHEMICALS 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 Chemcon Speciality with a short position of JGCHEMICALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemcon Speciality and JGCHEMICALS.

Diversification Opportunities for Chemcon Speciality and JGCHEMICALS

-0.29

Correlation Coefficient

Chemcon Speciality  JGCHEMICALS

Very good diversification

The 3 months correlation between Chemcon and JGCHEMICALS is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Chemcon Speciality Chemicals and JGCHEMICALS LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JGCHEMICALS LIMITED and Chemcon Speciality 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 Chemcon Speciality Chemicals are associated (or correlated) with JGCHEMICALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JGCHEMICALS LIMITED has no effect on the direction of Chemcon Speciality i.e., Chemcon Speciality and JGCHEMICALS go up and down completely randomly.

Pair Corralation between Chemcon Speciality and JGCHEMICALS

Assuming the 90 days trading horizon Chemcon Speciality Chemicals is expected to under-perform the JGCHEMICALS. But the stock apears to be less risky and, when comparing its historical volatility, Chemcon Speciality Chemicals is 2.74 times less risky than JGCHEMICALS. The stock trades about -0.08 of its potential returns per unit of risk. The JGCHEMICALS LIMITED is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  33,980  in JGCHEMICALS LIMITED on October 11, 2024 and sell it today you would earn a total of  4,885  from holding JGCHEMICALS LIMITED or generate 14.38% return on investment over 90 days.

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

Chemcon Speciality Chemicals  vs.  JGCHEMICALS LIMITED

Chemcon Speciality

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chemcon Speciality Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

JGCHEMICALS LIMITED

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JGCHEMICALS LIMITED has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical indicators, JGCHEMICALS is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Chemcon Speciality and JGCHEMICALS

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

The idea behind Chemcon Speciality Chemicals and JGCHEMICALS LIMITED 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 Managers module to screen money managers from public funds and ETFs managed around the world.