Correlation Between Jai Balaji and KIOCL

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

Diversification Opportunities for Jai Balaji and KIOCL

-0.22

Correlation Coefficient

Jai Balaji  KIOCL

Very good diversification

The 3 months correlation between Jai and KIOCL is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Jai Balaji Industries and KIOCL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIOCL 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 KIOCL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KIOCL Limited has no effect on the direction of Jai Balaji i.e., Jai Balaji and KIOCL go up and down completely randomly.

Pair Corralation between Jai Balaji and KIOCL

Assuming the 90 days trading horizon Jai Balaji Industries is expected to generate 0.83 times more return on investment than KIOCL. However, Jai Balaji Industries is 1.21 times less risky than KIOCL. It trades about 0.2 of its potential returns per unit of risk. KIOCL Limited is currently generating about 0.05 per unit of risk. If you would invest  5,555  in Jai Balaji Industries on October 4, 2024 and sell it today you would earn a total of  84,715  from holding Jai Balaji Industries or generate 1525.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.77%
Values	Daily Returns

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

KIOCL Limited

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KIOCL Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, KIOCL displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jai Balaji and KIOCL

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

The idea behind Jai Balaji Industries and KIOCL 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.