Correlation Between JB Chemicals and Fine Organic

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

Diversification Opportunities for JB Chemicals and Fine Organic

-0.2

Correlation Coefficient

JB Chemicals  Fine Organic

Good diversification

The 3 months correlation between JBCHEPHARM and Fine is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding JB Chemicals Pharmaceuticals and Fine Organic Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fine Organic Industries 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 Fine Organic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fine Organic Industries has no effect on the direction of JB Chemicals i.e., JB Chemicals and Fine Organic go up and down completely randomly.

Pair Corralation between JB Chemicals and Fine Organic

Assuming the 90 days trading horizon JB Chemicals Pharmaceuticals is expected to generate 0.78 times more return on investment than Fine Organic. However, JB Chemicals Pharmaceuticals is 1.27 times less risky than Fine Organic. It trades about 0.05 of its potential returns per unit of risk. Fine Organic Industries is currently generating about -0.08 per unit of risk. If you would invest  180,900  in JB Chemicals Pharmaceuticals on October 11, 2024 and sell it today you would earn a total of  8,735  from holding JB Chemicals Pharmaceuticals or generate 4.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

JB Chemicals Pharmaceuticals  vs.  Fine Organic Industries

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.

Fine Organic Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fine Organic Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with JB Chemicals and Fine Organic

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

The idea behind JB Chemicals Pharmaceuticals and Fine Organic Industries 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.

Check out your portfolio center.

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.