Correlation Between Jayant Agro and Ami Organics

Can any of the company-specific risk be diversified away by investing in both Jayant Agro and Ami 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 Jayant Agro and Ami Organics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jayant Agro Organics and Ami Organics Limited, you can compare the effects of market volatilities on Jayant Agro and Ami 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 Jayant Agro with a short position of Ami Organics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jayant Agro and Ami Organics.

Diversification Opportunities for Jayant Agro and Ami Organics

-0.14

Correlation Coefficient

Jayant Agro  Ami Organics

Good diversification

The 3 months correlation between Jayant and Ami is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Jayant Agro Organics and Ami Organics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ami Organics Limited and Jayant Agro 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 Jayant Agro Organics are associated (or correlated) with Ami Organics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ami Organics Limited has no effect on the direction of Jayant Agro i.e., Jayant Agro and Ami Organics go up and down completely randomly.

Pair Corralation between Jayant Agro and Ami Organics

Assuming the 90 days trading horizon Jayant Agro is expected to generate 1.8 times less return on investment than Ami Organics. In addition to that, Jayant Agro is 1.08 times more volatile than Ami Organics Limited. It trades about 0.04 of its total potential returns per unit of risk. Ami Organics Limited is currently generating about 0.09 per unit of volatility. If you would invest  91,384  in Ami Organics Limited on October 5, 2024 and sell it today you would earn a total of  118,571  from holding Ami Organics Limited or generate 129.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Jayant Agro Organics  vs.  Ami Organics Limited

Jayant Agro Organics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jayant Agro Organics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Jayant Agro is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Ami Organics Limited

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ami Organics Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Ami Organics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jayant Agro and Ami Organics

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

The idea behind Jayant Agro Organics and Ami 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.