Correlation Between Jai Balaji and Vinati Organics

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

Diversification Opportunities for Jai Balaji and Vinati Organics

0.73

Correlation Coefficient

Jai Balaji  Vinati Organics

Poor diversification

The 3 months correlation between Jai and Vinati is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Jai Balaji Industries and Vinati Organics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vinati Organics 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 Vinati Organics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vinati Organics has no effect on the direction of Jai Balaji i.e., Jai Balaji and Vinati Organics go up and down completely randomly.

Pair Corralation between Jai Balaji and Vinati Organics

Assuming the 90 days trading horizon Jai Balaji Industries is expected to under-perform the Vinati Organics. In addition to that, Jai Balaji is 1.96 times more volatile than Vinati Organics Limited. It trades about -0.1 of its total potential returns per unit of risk. Vinati Organics Limited is currently generating about -0.07 per unit of volatility. If you would invest  175,425  in Vinati Organics Limited on December 27, 2024 and sell it today you would lose (15,105) from holding Vinati Organics Limited or give up 8.61% 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.  Vinati Organics Limited

Jai Balaji Industries

Risk-Adjusted Performance

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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Vinati Organics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vinati Organics Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Jai Balaji and Vinati Organics

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

The idea behind Jai Balaji Industries and Vinati Organics 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.