Correlation Between Indian Oil and Jagsonpal Pharmaceuticals

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

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

Diversification Opportunities for Indian Oil and Jagsonpal Pharmaceuticals

-0.83

Correlation Coefficient

Indian Oil  Jagsonpal Pharmaceuticals

Pay attention - limited upside

The 3 months correlation between Indian and Jagsonpal is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Indian Oil and Jagsonpal Pharmaceuticals Limi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jagsonpal Pharmaceuticals and Indian Oil 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 Indian Oil are associated (or correlated) with Jagsonpal Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jagsonpal Pharmaceuticals has no effect on the direction of Indian Oil i.e., Indian Oil and Jagsonpal Pharmaceuticals go up and down completely randomly.

Pair Corralation between Indian Oil and Jagsonpal Pharmaceuticals

Assuming the 90 days trading horizon Indian Oil is expected to under-perform the Jagsonpal Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Indian Oil is 2.07 times less risky than Jagsonpal Pharmaceuticals. The stock trades about -0.05 of its potential returns per unit of risk. The Jagsonpal Pharmaceuticals Limited is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  33,370  in Jagsonpal Pharmaceuticals Limited on September 26, 2024 and sell it today you would earn a total of  30,295  from holding Jagsonpal Pharmaceuticals Limited or generate 90.79% return on investment over 90 days.

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

Indian Oil  vs.  Jagsonpal Pharmaceuticals Limi

Indian Oil

Risk-Adjusted Performance

0 of 100

Very Weak

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

Jagsonpal Pharmaceuticals

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jagsonpal Pharmaceuticals Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Jagsonpal Pharmaceuticals demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Indian Oil and Jagsonpal Pharmaceuticals

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

The idea behind Indian Oil and Jagsonpal Pharmaceuticals 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.