Correlation Between Jai Balaji and Indo Amines

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

Diversification Opportunities for Jai Balaji and Indo Amines

0.9

Correlation Coefficient

Jai Balaji  Indo Amines

Almost no diversification

The 3 months correlation between Jai and Indo is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Jai Balaji Industries and Indo Amines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indo Amines 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 Indo Amines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indo Amines Limited has no effect on the direction of Jai Balaji i.e., Jai Balaji and Indo Amines go up and down completely randomly.

Pair Corralation between Jai Balaji and Indo Amines

Assuming the 90 days trading horizon Jai Balaji Industries is expected to generate 1.01 times more return on investment than Indo Amines. However, Jai Balaji is 1.01 times more volatile than Indo Amines Limited. It trades about -0.08 of its potential returns per unit of risk. Indo Amines Limited is currently generating about -0.13 per unit of risk. If you would invest  17,977  in Jai Balaji Industries on December 24, 2024 and sell it today you would lose (3,823) from holding Jai Balaji Industries or give up 21.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Jai Balaji Industries  vs.  Indo Amines Limited

Jai Balaji Industries

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Indo Amines Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Indo Amines Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Jai Balaji and Indo Amines

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

The idea behind Jai Balaji Industries and Indo Amines 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.