Correlation Between Jayant Agro and Dhunseri Investments

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

Diversification Opportunities for Jayant Agro and Dhunseri Investments

0.6

Correlation Coefficient

Jayant Agro  Dhunseri Investments

Poor diversification

The 3 months correlation between Jayant and Dhunseri is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Jayant Agro Organics and Dhunseri Investments Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dhunseri Investments 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 Dhunseri Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dhunseri Investments has no effect on the direction of Jayant Agro i.e., Jayant Agro and Dhunseri Investments go up and down completely randomly.

Pair Corralation between Jayant Agro and Dhunseri Investments

Assuming the 90 days trading horizon Jayant Agro is expected to generate 2.23 times less return on investment than Dhunseri Investments. But when comparing it to its historical volatility, Jayant Agro Organics is 1.37 times less risky than Dhunseri Investments. It trades about 0.05 of its potential returns per unit of risk. Dhunseri Investments Limited is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  65,951  in Dhunseri Investments Limited on October 27, 2024 and sell it today you would earn a total of  108,709  from holding Dhunseri Investments Limited or generate 164.83% return on investment over 90 days.

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

Jayant Agro Organics  vs.  Dhunseri Investments Limited

Jayant Agro Organics

Risk-Adjusted Performance

0 of 100

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 latest stock price disarray, may contribute to short-term losses for the investors.

Dhunseri Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dhunseri Investments Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Jayant Agro and Dhunseri Investments

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

The idea behind Jayant Agro Organics and Dhunseri Investments 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.