Correlation Between JB Chemicals and Cholamandalam Investment

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

Diversification Opportunities for JB Chemicals and Cholamandalam Investment

0.17

Correlation Coefficient

JB Chemicals  Cholamandalam Investment

Average diversification

The 3 months correlation between JBCHEPHARM and Cholamandalam is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding JB Chemicals Pharmaceuticals and Cholamandalam Investment and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cholamandalam Investment 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 Cholamandalam Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cholamandalam Investment has no effect on the direction of JB Chemicals i.e., JB Chemicals and Cholamandalam Investment go up and down completely randomly.

Pair Corralation between JB Chemicals and Cholamandalam Investment

Assuming the 90 days trading horizon JB Chemicals Pharmaceuticals is expected to generate 0.63 times more return on investment than Cholamandalam Investment. However, JB Chemicals Pharmaceuticals is 1.59 times less risky than Cholamandalam Investment. It trades about 0.16 of its potential returns per unit of risk. Cholamandalam Investment and is currently generating about 0.07 per unit of risk. If you would invest  178,000  in JB Chemicals Pharmaceuticals on October 8, 2024 and sell it today you would earn a total of  8,760  from holding JB Chemicals Pharmaceuticals or generate 4.92% return on investment over 90 days.

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

JB Chemicals Pharmaceuticals  vs.  Cholamandalam Investment and

JB Chemicals Pharmac

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JB Chemicals Pharmaceuticals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, JB Chemicals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Cholamandalam Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cholamandalam Investment and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with JB Chemicals and Cholamandalam Investment

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

The idea behind JB Chemicals Pharmaceuticals and Cholamandalam Investment 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.