Correlation Between Engineers India and JGCHEMICALS

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

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

Diversification Opportunities for Engineers India and JGCHEMICALS

0.41

Correlation Coefficient

Engineers India  JGCHEMICALS

Very weak diversification

The 3 months correlation between Engineers and JGCHEMICALS is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Engineers India Limited and JGCHEMICALS LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JGCHEMICALS LIMITED and Engineers India 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 Engineers India Limited 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 Engineers India i.e., Engineers India and JGCHEMICALS go up and down completely randomly.

Pair Corralation between Engineers India and JGCHEMICALS

Assuming the 90 days trading horizon Engineers India Limited is expected to generate 1.03 times more return on investment than JGCHEMICALS. However, Engineers India is 1.03 times more volatile than JGCHEMICALS LIMITED. It trades about -0.34 of its potential returns per unit of risk. JGCHEMICALS LIMITED is currently generating about -0.37 per unit of risk. If you would invest  20,313  in Engineers India Limited on October 13, 2024 and sell it today you would lose (3,005) from holding Engineers India Limited or give up 14.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Engineers India Limited  vs.  JGCHEMICALS LIMITED

Engineers India

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Engineers India Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail 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 Engineers India and JGCHEMICALS

The main advantage of trading using opposite Engineers India and JGCHEMICALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engineers India 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 Engineers India Limited 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.