Correlation Between JB Chemicals and Oriental Hotels

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

Diversification Opportunities for JB Chemicals and Oriental Hotels

-0.22

Correlation Coefficient

JB Chemicals  Oriental Hotels

Very good diversification

The 3 months correlation between JBCHEPHARM and Oriental is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding JB Chemicals Pharmaceuticals and Oriental Hotels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Hotels 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 Oriental Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Hotels has no effect on the direction of JB Chemicals i.e., JB Chemicals and Oriental Hotels go up and down completely randomly.

Pair Corralation between JB Chemicals and Oriental Hotels

Assuming the 90 days trading horizon JB Chemicals Pharmaceuticals is expected to under-perform the Oriental Hotels. But the stock apears to be less risky and, when comparing its historical volatility, JB Chemicals Pharmaceuticals is 1.59 times less risky than Oriental Hotels. The stock trades about -0.07 of its potential returns per unit of risk. The Oriental Hotels Limited is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  17,446  in Oriental Hotels Limited on October 20, 2024 and sell it today you would lose (136.00) from holding Oriental Hotels Limited or give up 0.78% of portfolio value over 90 days.

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

JB Chemicals Pharmaceuticals  vs.  Oriental Hotels Limited

JB Chemicals Pharmac

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JB Chemicals Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Oriental Hotels

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Oriental Hotels Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Oriental Hotels is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with JB Chemicals and Oriental Hotels

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

The idea behind JB Chemicals Pharmaceuticals and Oriental 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.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..