Correlation Between Jai Balaji and Hindustan Copper

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

Diversification Opportunities for Jai Balaji and Hindustan Copper

0.81

Correlation Coefficient

Jai Balaji  Hindustan Copper

Very poor diversification

The 3 months correlation between Jai and Hindustan is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Jai Balaji Industries and Hindustan Copper Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hindustan Copper 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 Hindustan Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hindustan Copper has no effect on the direction of Jai Balaji i.e., Jai Balaji and Hindustan Copper go up and down completely randomly.

Pair Corralation between Jai Balaji and Hindustan Copper

Assuming the 90 days trading horizon Jai Balaji Industries is expected to generate 1.07 times more return on investment than Hindustan Copper. However, Jai Balaji is 1.07 times more volatile than Hindustan Copper Limited. It trades about 0.22 of its potential returns per unit of risk. Hindustan Copper Limited is currently generating about 0.08 per unit of risk. If you would invest  4,725  in Jai Balaji Industries on October 5, 2024 and sell it today you would earn a total of  85,545  from holding Jai Balaji Industries or generate 1810.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.88%
Values	Daily Returns

Jai Balaji Industries  vs.  Hindustan Copper Limited

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.

Hindustan Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hindustan Copper Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Jai Balaji and Hindustan Copper

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

The idea behind Jai Balaji Industries and Hindustan Copper 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.

Check out your portfolio center.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.