Correlation Between Jai Balaji and APL Apollo

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

By analyzing existing cross correlation between Jai Balaji Industries and APL Apollo Tubes, you can compare the effects of market volatilities on Jai Balaji and APL Apollo 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 Jai Balaji with a short position of APL Apollo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jai Balaji and APL Apollo.

Diversification Opportunities for Jai Balaji and APL Apollo

0.28

Correlation Coefficient

Jai Balaji  APL Apollo

Modest diversification

The 3 months correlation between Jai and APL is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Jai Balaji Industries and APL Apollo Tubes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APL Apollo Tubes and Jai Balaji 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 Jai Balaji Industries are associated (or correlated) with APL Apollo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APL Apollo Tubes has no effect on the direction of Jai Balaji i.e., Jai Balaji and APL Apollo go up and down completely randomly.

Pair Corralation between Jai Balaji and APL Apollo

Assuming the 90 days trading horizon Jai Balaji Industries is expected to generate 1.5 times more return on investment than APL Apollo. However, Jai Balaji is 1.5 times more volatile than APL Apollo Tubes. It trades about 0.07 of its potential returns per unit of risk. APL Apollo Tubes is currently generating about 0.0 per unit of risk. If you would invest  59,405  in Jai Balaji Industries on October 5, 2024 and sell it today you would earn a total of  30,865  from holding Jai Balaji Industries or generate 51.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.62%
Values	Daily Returns

Jai Balaji Industries  vs.  APL Apollo Tubes

Jai Balaji Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jai Balaji Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

APL Apollo Tubes

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in APL Apollo Tubes are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, APL Apollo is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Jai Balaji and APL Apollo

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

The idea behind Jai Balaji Industries and APL Apollo Tubes 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 Global Correlations module to find global opportunities by holding instruments from different markets.