Correlation Between Jayant Agro and Thermax

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

Diversification Opportunities for Jayant Agro and Thermax

0.31

Correlation Coefficient

Jayant Agro  Thermax

Weak diversification

The 3 months correlation between Jayant and Thermax is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Jayant Agro Organics and Thermax Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermax 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 Thermax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thermax Limited has no effect on the direction of Jayant Agro i.e., Jayant Agro and Thermax go up and down completely randomly.

Pair Corralation between Jayant Agro and Thermax

Assuming the 90 days trading horizon Jayant Agro Organics is expected to generate 0.81 times more return on investment than Thermax. However, Jayant Agro Organics is 1.23 times less risky than Thermax. It trades about -0.05 of its potential returns per unit of risk. Thermax Limited is currently generating about -0.17 per unit of risk. If you would invest  29,710  in Jayant Agro Organics on October 11, 2024 and sell it today you would lose (1,970) from holding Jayant Agro Organics or give up 6.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Jayant Agro Organics  vs.  Thermax 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 recent stock price disarray, may contribute to short-term losses for the investors.

Thermax Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thermax Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Jayant Agro and Thermax

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

The idea behind Jayant Agro Organics and Thermax 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.