Correlation Between Hemisphere Properties and Jubilant Foodworks

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

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

Diversification Opportunities for Hemisphere Properties and Jubilant Foodworks

0.36

Correlation Coefficient

Hemisphere Properties  Jubilant Foodworks

Weak diversification

The 3 months correlation between Hemisphere and Jubilant is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Hemisphere Properties India and Jubilant Foodworks Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jubilant Foodworks and Hemisphere Properties 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 Hemisphere Properties India 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 Hemisphere Properties i.e., Hemisphere Properties and Jubilant Foodworks go up and down completely randomly.

Pair Corralation between Hemisphere Properties and Jubilant Foodworks

Assuming the 90 days trading horizon Hemisphere Properties India is expected to under-perform the Jubilant Foodworks. In addition to that, Hemisphere Properties is 1.22 times more volatile than Jubilant Foodworks Limited. It trades about -0.17 of its total potential returns per unit of risk. Jubilant Foodworks Limited is currently generating about -0.02 per unit of volatility. If you would invest  65,190  in Jubilant Foodworks Limited on December 2, 2024 and sell it today you would lose (2,580) from holding Jubilant Foodworks Limited or give up 3.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Hemisphere Properties India  vs.  Jubilant Foodworks Limited

Hemisphere Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hemisphere Properties India has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Jubilant Foodworks

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jubilant Foodworks Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Jubilant Foodworks is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Hemisphere Properties and Jubilant Foodworks

The main advantage of trading using opposite Hemisphere Properties and Jubilant Foodworks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hemisphere Properties 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 Hemisphere Properties India 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.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.