Correlation Between Hilton Metal and Jai Balaji

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

By analyzing existing cross correlation between Hilton Metal Forging and Jai Balaji Industries, you can compare the effects of market volatilities on Hilton Metal and Jai Balaji 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 Hilton Metal with a short position of Jai Balaji. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Metal and Jai Balaji.

Diversification Opportunities for Hilton Metal and Jai Balaji

-0.45

Correlation Coefficient

Hilton Metal  Jai Balaji

Very good diversification

The 3 months correlation between Hilton and Jai is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Metal Forging and Jai Balaji Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jai Balaji Industries and Hilton Metal 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 Hilton Metal Forging are associated (or correlated) with Jai Balaji. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jai Balaji Industries has no effect on the direction of Hilton Metal i.e., Hilton Metal and Jai Balaji go up and down completely randomly.

Pair Corralation between Hilton Metal and Jai Balaji

Assuming the 90 days trading horizon Hilton Metal Forging is expected to generate 1.21 times more return on investment than Jai Balaji. However, Hilton Metal is 1.21 times more volatile than Jai Balaji Industries. It trades about 0.0 of its potential returns per unit of risk. Jai Balaji Industries is currently generating about -0.01 per unit of risk. If you would invest  13,545  in Hilton Metal Forging on October 9, 2024 and sell it today you would lose (1,887) from holding Hilton Metal Forging or give up 13.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.77%
Values	Daily Returns

Hilton Metal Forging  vs.  Jai Balaji Industries

Hilton Metal Forging

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hilton Metal Forging are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hilton Metal sustained solid returns over the last few months and may actually be approaching a breakup point.

Jai Balaji Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jai Balaji Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Hilton Metal and Jai Balaji

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

The idea behind Hilton Metal Forging and Jai Balaji 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.