Correlation Between Indo Borax and JB Chemicals

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

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

Diversification Opportunities for Indo Borax and JB Chemicals

0.25

Correlation Coefficient

Indo Borax  JB Chemicals

Modest diversification

The 3 months correlation between Indo and JBCHEPHARM is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Indo Borax Chemicals 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 Indo Borax 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 Indo Borax Chemicals 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 Indo Borax i.e., Indo Borax and JB Chemicals go up and down completely randomly.

Pair Corralation between Indo Borax and JB Chemicals

Assuming the 90 days trading horizon Indo Borax is expected to generate 11.86 times less return on investment than JB Chemicals. In addition to that, Indo Borax is 1.68 times more volatile than JB Chemicals Pharmaceuticals. It trades about 0.0 of its total potential returns per unit of risk. JB Chemicals Pharmaceuticals is currently generating about 0.09 per unit of volatility. If you would invest  170,000  in JB Chemicals Pharmaceuticals on October 5, 2024 and sell it today you would earn a total of  16,455  from holding JB Chemicals Pharmaceuticals or generate 9.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Indo Borax Chemicals  vs.  JB Chemicals Pharmaceuticals

Indo Borax Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indo Borax Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Indo Borax is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

JB Chemicals Pharmac

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JB Chemicals Pharmaceuticals are ranked lower than 7 (%) 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 Indo Borax and JB Chemicals

The main advantage of trading using opposite Indo Borax and JB Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indo Borax 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 Indo Borax Chemicals 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.