Correlation Between Jayant Agro and HCL Technologies

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

Diversification Opportunities for Jayant Agro and HCL Technologies

0.28

Correlation Coefficient

Jayant Agro  HCL Technologies

Modest diversification

The 3 months correlation between Jayant and HCL is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Jayant Agro Organics and HCL Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCL Technologies 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 HCL Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCL Technologies has no effect on the direction of Jayant Agro i.e., Jayant Agro and HCL Technologies go up and down completely randomly.

Pair Corralation between Jayant Agro and HCL Technologies

Assuming the 90 days trading horizon Jayant Agro is expected to generate 3.71 times less return on investment than HCL Technologies. In addition to that, Jayant Agro is 1.55 times more volatile than HCL Technologies Limited. It trades about 0.02 of its total potential returns per unit of risk. HCL Technologies Limited is currently generating about 0.13 per unit of volatility. If you would invest  183,840  in HCL Technologies Limited on October 7, 2024 and sell it today you would earn a total of  10,825  from holding HCL Technologies Limited or generate 5.89% return on investment over 90 days.

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

Jayant Agro Organics  vs.  HCL Technologies Limited

Jayant Agro Organics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jayant Agro Organics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

HCL Technologies

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HCL Technologies Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, HCL Technologies may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Jayant Agro and HCL Technologies

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

The idea behind Jayant Agro Organics and HCL Technologies 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.