Correlation Between HMT and Jaypee Infratech

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

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

Diversification Opportunities for HMT and Jaypee Infratech

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Correlation Coefficient

HMT  Jaypee Infratech

Pay attention - limited upside

The 3 months correlation between HMT and Jaypee is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding HMT Limited and Jaypee Infratech Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jaypee Infratech and HMT 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 HMT Limited are associated (or correlated) with Jaypee Infratech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jaypee Infratech has no effect on the direction of HMT i.e., HMT and Jaypee Infratech go up and down completely randomly.

Pair Corralation between HMT and Jaypee Infratech

Assuming the 90 days trading horizon HMT Limited is expected to generate 3.8 times more return on investment than Jaypee Infratech. However, HMT is 3.8 times more volatile than Jaypee Infratech Limited. It trades about 0.06 of its potential returns per unit of risk. Jaypee Infratech Limited is currently generating about -0.07 per unit of risk. If you would invest  3,490  in HMT Limited on October 10, 2024 and sell it today you would earn a total of  3,405  from holding HMT Limited or generate 97.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

HMT Limited  vs.  Jaypee Infratech Limited

HMT Limited

Risk-Adjusted Performance

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Very Weak

Over the last 90 days HMT Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Jaypee Infratech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jaypee Infratech Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Jaypee Infratech is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with HMT and Jaypee Infratech

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

The idea behind HMT Limited and Jaypee Infratech 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.