Correlation Between Hi Tech and JB Chemicals

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

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

Diversification Opportunities for Hi Tech and JB Chemicals

0.09

Correlation Coefficient

Hi Tech  JB Chemicals

Significant diversification

The 3 months correlation between HITECHGEAR and JBCHEPHARM is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding The Hi Tech Gears 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 Hi Tech 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 The Hi Tech Gears 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 Hi Tech i.e., Hi Tech and JB Chemicals go up and down completely randomly.

Pair Corralation between Hi Tech and JB Chemicals

Assuming the 90 days trading horizon The Hi Tech Gears is expected to under-perform the JB Chemicals. In addition to that, Hi Tech is 1.32 times more volatile than JB Chemicals Pharmaceuticals. It trades about -0.07 of its total potential returns per unit of risk. JB Chemicals Pharmaceuticals is currently generating about 0.04 per unit of volatility. If you would invest  172,799  in JB Chemicals Pharmaceuticals on October 4, 2024 and sell it today you would earn a total of  10,546  from holding JB Chemicals Pharmaceuticals or generate 6.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.19%
Values	Daily Returns

The Hi Tech Gears  vs.  JB Chemicals Pharmaceuticals

Hi Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Hi Tech Gears has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical and fundamental 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

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JB Chemicals Pharmaceuticals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, JB Chemicals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hi Tech and JB Chemicals

The main advantage of trading using opposite Hi Tech and JB Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hi Tech 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 The Hi Tech Gears 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.