Correlation Between JB Chemicals and Aptech

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

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

Diversification Opportunities for JB Chemicals and Aptech

0.26

Correlation Coefficient

JB Chemicals  Aptech

Modest diversification

The 3 months correlation between JBCHEPHARM and Aptech is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding JB Chemicals Pharmaceuticals and Aptech Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptech Limited and JB Chemicals 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 JB Chemicals Pharmaceuticals are associated (or correlated) with Aptech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptech Limited has no effect on the direction of JB Chemicals i.e., JB Chemicals and Aptech go up and down completely randomly.

Pair Corralation between JB Chemicals and Aptech

Assuming the 90 days trading horizon JB Chemicals Pharmaceuticals is expected to generate 0.66 times more return on investment than Aptech. However, JB Chemicals Pharmaceuticals is 1.52 times less risky than Aptech. It trades about 0.05 of its potential returns per unit of risk. Aptech Limited is currently generating about -0.07 per unit of risk. If you would invest  175,800  in JB Chemicals Pharmaceuticals on October 3, 2024 and sell it today you would earn a total of  8,615  from holding JB Chemicals Pharmaceuticals or generate 4.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

JB Chemicals Pharmaceuticals  vs.  Aptech Limited

JB Chemicals Pharmac

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JB Chemicals Pharmaceuticals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, JB Chemicals is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Aptech Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aptech Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with JB Chemicals and Aptech

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

The idea behind JB Chemicals Pharmaceuticals and Aptech 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.