Correlation Between Jayant Agro and Mangalam Drugs

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

Diversification Opportunities for Jayant Agro and Mangalam Drugs

0.66

Correlation Coefficient

Jayant Agro  Mangalam Drugs

Poor diversification

The 3 months correlation between Jayant and Mangalam is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Jayant Agro Organics and Mangalam Drugs And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mangalam Drugs And 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 Mangalam Drugs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mangalam Drugs And has no effect on the direction of Jayant Agro i.e., Jayant Agro and Mangalam Drugs go up and down completely randomly.

Pair Corralation between Jayant Agro and Mangalam Drugs

Assuming the 90 days trading horizon Jayant Agro Organics is expected to generate 0.92 times more return on investment than Mangalam Drugs. However, Jayant Agro Organics is 1.08 times less risky than Mangalam Drugs. It trades about -0.19 of its potential returns per unit of risk. Mangalam Drugs And is currently generating about -0.19 per unit of risk. If you would invest  29,395  in Jayant Agro Organics on October 18, 2024 and sell it today you would lose (3,240) from holding Jayant Agro Organics or give up 11.02% of portfolio value over 90 days.

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

Jayant Agro Organics  vs.  Mangalam Drugs And

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 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.

Mangalam Drugs And

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mangalam Drugs And has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Jayant Agro and Mangalam Drugs

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

The idea behind Jayant Agro Organics and Mangalam Drugs And 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.