Correlation Between Fine Organic and JB Chemicals

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

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

Diversification Opportunities for Fine Organic and JB Chemicals

0.9

Correlation Coefficient

Fine Organic  JB Chemicals

Almost no diversification

The 3 months correlation between Fine and JBCHEPHARM is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Fine Organic Industries and JB Chemicals Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JB Chemicals Pharmac and Fine Organic 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 Fine Organic Industries are associated (or correlated) with JB Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JB Chemicals Pharmac has no effect on the direction of Fine Organic i.e., Fine Organic and JB Chemicals go up and down completely randomly.

Pair Corralation between Fine Organic and JB Chemicals

Assuming the 90 days trading horizon Fine Organic Industries is expected to under-perform the JB Chemicals. In addition to that, Fine Organic is 1.0 times more volatile than JB Chemicals Pharmaceuticals. It trades about -0.09 of its total potential returns per unit of risk. JB Chemicals Pharmaceuticals is currently generating about -0.03 per unit of volatility. If you would invest  180,103  in JB Chemicals Pharmaceuticals on December 27, 2024 and sell it today you would lose (9,228) from holding JB Chemicals Pharmaceuticals or give up 5.12% of portfolio value over 90 days.

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

Fine Organic Industries  vs.  JB Chemicals Pharmaceuticals

Fine Organic Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fine Organic Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

JB Chemicals Pharmac

Risk-Adjusted Performance

Very Weak

Over the last 90 days JB Chemicals Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, JB Chemicals is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Fine Organic and JB Chemicals

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

The idea behind Fine Organic Industries and JB Chemicals Pharmaceuticals 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..