Correlation Between Gujarat Lease and JTL Industries

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

By analyzing existing cross correlation between Gujarat Lease Financing and JTL Industries, you can compare the effects of market volatilities on Gujarat Lease and JTL Industries 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 Gujarat Lease with a short position of JTL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gujarat Lease and JTL Industries.

Diversification Opportunities for Gujarat Lease and JTL Industries

0.46

Correlation Coefficient

Gujarat Lease  JTL Industries

Very weak diversification

The 3 months correlation between Gujarat and JTL is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Gujarat Lease Financing and JTL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JTL Industries and Gujarat Lease 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 Gujarat Lease Financing are associated (or correlated) with JTL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JTL Industries has no effect on the direction of Gujarat Lease i.e., Gujarat Lease and JTL Industries go up and down completely randomly.

Pair Corralation between Gujarat Lease and JTL Industries

Assuming the 90 days trading horizon Gujarat Lease Financing is expected to generate 0.85 times more return on investment than JTL Industries. However, Gujarat Lease Financing is 1.17 times less risky than JTL Industries. It trades about 0.09 of its potential returns per unit of risk. JTL Industries is currently generating about -0.03 per unit of risk. If you would invest  719.00  in Gujarat Lease Financing on October 24, 2024 and sell it today you would earn a total of  118.00  from holding Gujarat Lease Financing or generate 16.41% return on investment over 90 days.

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

Gujarat Lease Financing  vs.  JTL Industries

Gujarat Lease Financing

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gujarat Lease Financing are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Gujarat Lease is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

JTL Industries

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JTL Industries are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating forward indicators, JTL Industries may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Gujarat Lease and JTL Industries

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

The idea behind Gujarat Lease Financing and JTL 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.

Check out your portfolio center.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.