Correlation Between Jai Balaji and Plastiblends India

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

Diversification Opportunities for Jai Balaji and Plastiblends India

0.62

Correlation Coefficient

Jai Balaji  Plastiblends India

Poor diversification

The 3 months correlation between Jai and Plastiblends is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Jai Balaji Industries and Plastiblends India Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plastiblends India 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 Plastiblends India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plastiblends India has no effect on the direction of Jai Balaji i.e., Jai Balaji and Plastiblends India go up and down completely randomly.

Pair Corralation between Jai Balaji and Plastiblends India

Assuming the 90 days trading horizon Jai Balaji Industries is expected to under-perform the Plastiblends India. But the stock apears to be less risky and, when comparing its historical volatility, Jai Balaji Industries is 1.18 times less risky than Plastiblends India. The stock trades about -0.4 of its potential returns per unit of risk. The Plastiblends India Limited is currently generating about -0.2 of returns per unit of risk over similar time horizon. If you would invest  27,015  in Plastiblends India Limited on October 11, 2024 and sell it today you would lose (2,365) from holding Plastiblends India Limited or give up 8.75% of portfolio value over 90 days.

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

Jai Balaji Industries  vs.  Plastiblends India 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 uncertain 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.

Plastiblends India

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Plastiblends India Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's essential 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.

Pair Trading with Jai Balaji and Plastiblends India

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

The idea behind Jai Balaji Industries and Plastiblends India 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.