Correlation Between JB Chemicals and Kamat Hotels

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

Diversification Opportunities for JB Chemicals and Kamat Hotels

0.18

Correlation Coefficient

JB Chemicals  Kamat Hotels

Average diversification

The 3 months correlation between JBCHEPHARM and Kamat is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding JB Chemicals Pharmaceuticals and Kamat Hotels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kamat Hotels 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 Kamat Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kamat Hotels Limited has no effect on the direction of JB Chemicals i.e., JB Chemicals and Kamat Hotels go up and down completely randomly.

Pair Corralation between JB Chemicals and Kamat Hotels

Assuming the 90 days trading horizon JB Chemicals Pharmaceuticals is expected to generate 2.64 times more return on investment than Kamat Hotels. However, JB Chemicals is 2.64 times more volatile than Kamat Hotels Limited. It trades about 0.05 of its potential returns per unit of risk. Kamat Hotels Limited is currently generating about 0.05 per unit of risk. If you would invest  97,309  in JB Chemicals Pharmaceuticals on October 10, 2024 and sell it today you would earn a total of  92,331  from holding JB Chemicals Pharmaceuticals or generate 94.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

JB Chemicals Pharmaceuticals  vs.  Kamat Hotels Limited

JB Chemicals Pharmac

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JB Chemicals Pharmaceuticals are ranked lower than 3 (%) 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 current stock price confusion, may contribute to short-horizon losses for the traders.

Kamat Hotels Limited

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kamat Hotels Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Kamat Hotels displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JB Chemicals and Kamat Hotels

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

The idea behind JB Chemicals Pharmaceuticals and Kamat Hotels 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 Commodity Directory module to find actively traded commodities issued by global exchanges.