Correlation Between Indo Borax and Jaypee Infratech

Can any of the company-specific risk be diversified away by investing in both Indo Borax 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 Indo Borax and Jaypee Infratech 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 Jaypee Infratech Limited, you can compare the effects of market volatilities on Indo Borax 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 Indo Borax with a short position of Jaypee Infratech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indo Borax and Jaypee Infratech.

Diversification Opportunities for Indo Borax and Jaypee Infratech

0.0

Correlation Coefficient

Indo Borax  Jaypee Infratech

Pay attention - limited upside

The 3 months correlation between Indo and Jaypee is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Indo Borax Chemicals and Jaypee Infratech Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jaypee Infratech 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 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 Indo Borax i.e., Indo Borax and Jaypee Infratech go up and down completely randomly.

Pair Corralation between Indo Borax and Jaypee Infratech

Assuming the 90 days trading horizon Indo Borax Chemicals is expected to generate 3.98 times more return on investment than Jaypee Infratech. However, Indo Borax is 3.98 times more volatile than Jaypee Infratech Limited. It trades about 0.04 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  13,220  in Indo Borax Chemicals on October 5, 2024 and sell it today you would earn a total of  5,069  from holding Indo Borax Chemicals or generate 38.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.59%
Values	Daily Returns

Indo Borax Chemicals  vs.  Jaypee Infratech Limited

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.

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 latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Indo Borax and Jaypee Infratech

The main advantage of trading using opposite Indo Borax and Jaypee Infratech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indo Borax 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 Indo Borax Chemicals 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.