Correlation Between Embassy Office and Jai Balaji

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

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

Diversification Opportunities for Embassy Office and Jai Balaji

0.84

Correlation Coefficient

Embassy Office  Jai Balaji

Very poor diversification

The 3 months correlation between Embassy and Jai is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Embassy Office Parks 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 Embassy Office 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 Embassy Office Parks 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 Embassy Office i.e., Embassy Office and Jai Balaji go up and down completely randomly.

Pair Corralation between Embassy Office and Jai Balaji

Assuming the 90 days trading horizon Embassy Office Parks is expected to generate 0.98 times more return on investment than Jai Balaji. However, Embassy Office Parks is 1.02 times less risky than Jai Balaji. It trades about 0.04 of its potential returns per unit of risk. Jai Balaji Industries is currently generating about -0.28 per unit of risk. If you would invest  36,580  in Embassy Office Parks on October 5, 2024 and sell it today you would earn a total of  460.00  from holding Embassy Office Parks or generate 1.26% return on investment over 90 days.

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

Embassy Office Parks  vs.  Jai Balaji Industries

Embassy Office Parks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Embassy Office Parks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Embassy Office is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the 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 latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Embassy Office and Jai Balaji

The main advantage of trading using opposite Embassy Office and Jai Balaji positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embassy Office 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 Embassy Office Parks 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.