Correlation Between Jai Balaji and PI Industries

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

Diversification Opportunities for Jai Balaji and PI Industries

0.18

Correlation Coefficient

Jai Balaji  PI Industries

Average diversification

The 3 months correlation between Jai and PIIND is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Jai Balaji Industries and PI Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PI Industries 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 PI Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PI Industries Limited has no effect on the direction of Jai Balaji i.e., Jai Balaji and PI Industries go up and down completely randomly.

Pair Corralation between Jai Balaji and PI Industries

Assuming the 90 days trading horizon Jai Balaji Industries is expected to generate 36.61 times more return on investment than PI Industries. However, Jai Balaji is 36.61 times more volatile than PI Industries Limited. It trades about 0.09 of its potential returns per unit of risk. PI Industries Limited is currently generating about -0.21 per unit of risk. If you would invest  21,007  in Jai Balaji Industries on October 22, 2024 and sell it today you would lose (4,287) from holding Jai Balaji Industries or give up 20.41% of portfolio value over 90 days.

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

Jai Balaji Industries  vs.  PI Industries Limited

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

PI Industries Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PI Industries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Jai Balaji and PI Industries

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

The idea behind Jai Balaji Industries and PI Industries 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.