Correlation Between EMBASSY OFFICE and Jubilant Foodworks

Can any of the company-specific risk be diversified away by investing in both EMBASSY OFFICE and Jubilant Foodworks 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 Jubilant Foodworks 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 Jubilant Foodworks Limited, you can compare the effects of market volatilities on EMBASSY OFFICE and Jubilant Foodworks 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 Jubilant Foodworks. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMBASSY OFFICE and Jubilant Foodworks.

Diversification Opportunities for EMBASSY OFFICE and Jubilant Foodworks

-0.61

Correlation Coefficient

EMBASSY OFFICE  Jubilant Foodworks

Excellent diversification

The 3 months correlation between EMBASSY and Jubilant is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding EMBASSY OFFICE PARKS and Jubilant Foodworks Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jubilant Foodworks 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 Jubilant Foodworks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jubilant Foodworks has no effect on the direction of EMBASSY OFFICE i.e., EMBASSY OFFICE and Jubilant Foodworks go up and down completely randomly.

Pair Corralation between EMBASSY OFFICE and Jubilant Foodworks

Assuming the 90 days trading horizon EMBASSY OFFICE is expected to generate 1.37 times less return on investment than Jubilant Foodworks. But when comparing it to its historical volatility, EMBASSY OFFICE PARKS is 1.19 times less risky than Jubilant Foodworks. It trades about 0.05 of its potential returns per unit of risk. Jubilant Foodworks Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  55,999  in Jubilant Foodworks Limited on September 30, 2024 and sell it today you would earn a total of  14,811  from holding Jubilant Foodworks Limited or generate 26.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.46%
Values	Daily Returns

EMBASSY OFFICE PARKS  vs.  Jubilant Foodworks Limited

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 newest stock price disturbance, may contribute to short-term losses for the investors.

Jubilant Foodworks

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jubilant Foodworks Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Jubilant Foodworks is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with EMBASSY OFFICE and Jubilant Foodworks

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

The idea behind EMBASSY OFFICE PARKS and Jubilant Foodworks 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.