Correlation Between CSB Bank and Jai Balaji

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

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

Diversification Opportunities for CSB Bank and Jai Balaji

-0.22

Correlation Coefficient

CSB Bank  Jai Balaji

Very good diversification

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

Pair Corralation between CSB Bank and Jai Balaji

Assuming the 90 days trading horizon CSB Bank Limited is expected to generate 0.66 times more return on investment than Jai Balaji. However, CSB Bank Limited is 1.51 times less risky than Jai Balaji. It trades about 0.0 of its potential returns per unit of risk. Jai Balaji Industries is currently generating about -0.18 per unit of risk. If you would invest  31,555  in CSB Bank Limited on October 9, 2024 and sell it today you would lose (285.00) from holding CSB Bank Limited or give up 0.9% of portfolio value over 90 days.

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

CSB Bank Limited  vs.  Jai Balaji Industries

CSB Bank Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSB Bank Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, CSB Bank is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Jai Balaji Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jai Balaji Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with CSB Bank and Jai Balaji

The main advantage of trading using opposite CSB Bank and Jai Balaji positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSB Bank 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 CSB Bank Limited 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.