Correlation Between Jai Balaji and Omkar Speciality

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

Diversification Opportunities for Jai Balaji and Omkar Speciality

0.41

Correlation Coefficient

Jai Balaji  Omkar Speciality

Very weak diversification

The 3 months correlation between Jai and Omkar is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Jai Balaji Industries and Omkar Speciality Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omkar Speciality Che 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 Omkar Speciality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omkar Speciality Che has no effect on the direction of Jai Balaji i.e., Jai Balaji and Omkar Speciality go up and down completely randomly.

Pair Corralation between Jai Balaji and Omkar Speciality

Assuming the 90 days trading horizon Jai Balaji Industries is expected to generate 0.83 times more return on investment than Omkar Speciality. However, Jai Balaji Industries is 1.21 times less risky than Omkar Speciality. It trades about -0.18 of its potential returns per unit of risk. Omkar Speciality Chemicals is currently generating about -0.17 per unit of risk. If you would invest  107,605  in Jai Balaji Industries on October 7, 2024 and sell it today you would lose (17,310) from holding Jai Balaji Industries or give up 16.09% of portfolio value over 90 days.

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

Jai Balaji Industries  vs.  Omkar Speciality Chemicals

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 weak 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.

Omkar Speciality Che

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Omkar Speciality Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Omkar Speciality is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Jai Balaji and Omkar Speciality

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

The idea behind Jai Balaji Industries and Omkar Speciality Chemicals 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.