Correlation Between Jai Balaji and Manaksia Coated

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

Diversification Opportunities for Jai Balaji and Manaksia Coated

-0.25

Correlation Coefficient

Jai Balaji  Manaksia Coated

Very good diversification

The 3 months correlation between Jai and Manaksia is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Jai Balaji Industries and Manaksia Coated Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manaksia Coated Metals 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 Manaksia Coated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manaksia Coated Metals has no effect on the direction of Jai Balaji i.e., Jai Balaji and Manaksia Coated go up and down completely randomly.

Pair Corralation between Jai Balaji and Manaksia Coated

Assuming the 90 days trading horizon Jai Balaji Industries is expected to generate 18.56 times more return on investment than Manaksia Coated. However, Jai Balaji is 18.56 times more volatile than Manaksia Coated Metals. It trades about 0.09 of its potential returns per unit of risk. Manaksia Coated Metals is currently generating about 0.39 per unit of risk. If you would invest  19,897  in Jai Balaji Industries on October 25, 2024 and sell it today you would lose (4,452) from holding Jai Balaji Industries or give up 22.38% 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.  Manaksia Coated Metals

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 weak basic indicators, Jai Balaji sustained solid returns over the last few months and may actually be approaching a breakup point.

Manaksia Coated Metals

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Manaksia Coated Metals are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Manaksia Coated displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jai Balaji and Manaksia Coated

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

The idea behind Jai Balaji Industries and Manaksia Coated Metals 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.