Correlation Between Jai Balaji and COSMO FIRST

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

Diversification Opportunities for Jai Balaji and COSMO FIRST

-0.52
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Jai and COSMO is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Jai Balaji Industries and COSMO FIRST LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSMO FIRST LIMITED 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 COSMO FIRST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSMO FIRST LIMITED has no effect on the direction of Jai Balaji i.e., Jai Balaji and COSMO FIRST go up and down completely randomly.

Pair Corralation between Jai Balaji and COSMO FIRST

Assuming the 90 days trading horizon Jai Balaji Industries is expected to generate 1.02 times more return on investment than COSMO FIRST. However, Jai Balaji is 1.02 times more volatile than COSMO FIRST LIMITED. It trades about 0.08 of its potential returns per unit of risk. COSMO FIRST LIMITED is currently generating about 0.06 per unit of risk. If you would invest  51,015  in Jai Balaji Industries on October 5, 2024 and sell it today you would earn a total of  39,280  from holding Jai Balaji Industries or generate 77.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy99.67%
ValuesDaily Returns

Jai Balaji Industries  vs.  COSMO FIRST LIMITED

 Performance 
       Timeline  
Jai Balaji Industries 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
COSMO FIRST LIMITED 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in COSMO FIRST LIMITED are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, COSMO FIRST demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Jai Balaji and COSMO FIRST Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Jai Balaji and COSMO FIRST

The main advantage of trading using opposite Jai Balaji and COSMO FIRST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jai Balaji position performs unexpectedly, COSMO FIRST 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 COSMO FIRST will offset losses from the drop in COSMO FIRST's long position.
The idea behind Jai Balaji Industries and COSMO FIRST 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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