Correlation Between Fertilizers and JGCHEMICALS

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

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

Diversification Opportunities for Fertilizers and JGCHEMICALS

0.58

Correlation Coefficient

Fertilizers  JGCHEMICALS

Very weak diversification

The 3 months correlation between Fertilizers and JGCHEMICALS is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Fertilizers and Chemicals and JGCHEMICALS LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JGCHEMICALS LIMITED and Fertilizers 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 Fertilizers and 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 Fertilizers i.e., Fertilizers and JGCHEMICALS go up and down completely randomly.

Pair Corralation between Fertilizers and JGCHEMICALS

Assuming the 90 days trading horizon Fertilizers and Chemicals is expected to generate 1.27 times more return on investment than JGCHEMICALS. However, Fertilizers is 1.27 times more volatile than JGCHEMICALS LIMITED. It trades about -0.1 of its potential returns per unit of risk. JGCHEMICALS LIMITED is currently generating about -0.34 per unit of risk. If you would invest  102,335  in Fertilizers and Chemicals on October 11, 2024 and sell it today you would lose (6,090) from holding Fertilizers and Chemicals or give up 5.95% of portfolio value over 90 days.

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

Fertilizers and Chemicals  vs.  JGCHEMICALS LIMITED

Fertilizers and Chemicals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fertilizers and Chemicals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Fertilizers may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 Fertilizers and JGCHEMICALS

The main advantage of trading using opposite Fertilizers and JGCHEMICALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fertilizers 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 Fertilizers and 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.