Correlation Between Jai Balaji and Coromandel International

Can any of the company-specific risk be diversified away by investing in both Jai Balaji and Coromandel International 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 Coromandel International 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 Coromandel International Limited, you can compare the effects of market volatilities on Jai Balaji and Coromandel International 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 Coromandel International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jai Balaji and Coromandel International.

Diversification Opportunities for Jai Balaji and Coromandel International

-0.14

Correlation Coefficient

Jai Balaji  Coromandel International

Good diversification

The 3 months correlation between Jai and Coromandel is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Jai Balaji Industries and Coromandel International Limit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coromandel International 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 Coromandel International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coromandel International has no effect on the direction of Jai Balaji i.e., Jai Balaji and Coromandel International go up and down completely randomly.

Pair Corralation between Jai Balaji and Coromandel International

Assuming the 90 days trading horizon Jai Balaji Industries is expected to generate 31.21 times more return on investment than Coromandel International. However, Jai Balaji is 31.21 times more volatile than Coromandel International Limited. It trades about 0.09 of its potential returns per unit of risk. Coromandel International Limited is currently generating about 0.18 per unit of risk. If you would invest  21,007  in Jai Balaji Industries on October 22, 2024 and sell it today you would lose (4,287) from holding Jai Balaji Industries or give up 20.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Jai Balaji Industries  vs.  Coromandel International Limit

Jai Balaji Industries

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jai Balaji Industries are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Jai Balaji sustained solid returns over the last few months and may actually be approaching a breakup point.

Coromandel International

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Coromandel International Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Coromandel International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jai Balaji and Coromandel International

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

The idea behind Jai Balaji Industries and Coromandel International 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.