Correlation Between JB Chemicals and Sanginita Chemicals

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

Diversification Opportunities for JB Chemicals and Sanginita Chemicals

0.21

Correlation Coefficient

JB Chemicals  Sanginita Chemicals

Modest diversification

The 3 months correlation between JBCHEPHARM and Sanginita is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding JB Chemicals Pharmaceuticals and Sanginita Chemicals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanginita Chemicals 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 Sanginita Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanginita Chemicals has no effect on the direction of JB Chemicals i.e., JB Chemicals and Sanginita Chemicals go up and down completely randomly.

Pair Corralation between JB Chemicals and Sanginita Chemicals

Assuming the 90 days trading horizon JB Chemicals Pharmaceuticals is expected to generate 0.68 times more return on investment than Sanginita Chemicals. However, JB Chemicals Pharmaceuticals is 1.47 times less risky than Sanginita Chemicals. It trades about 0.04 of its potential returns per unit of risk. Sanginita Chemicals Limited is currently generating about -0.1 per unit of risk. If you would invest  164,230  in JB Chemicals Pharmaceuticals on October 9, 2024 and sell it today you would earn a total of  25,410  from holding JB Chemicals Pharmaceuticals or generate 15.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.59%
Values	Daily Returns

JB Chemicals Pharmaceuticals  vs.  Sanginita Chemicals Limited

JB Chemicals Pharmac

Risk-Adjusted Performance

4 of 100

Weak

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 uncertain basic indicators, JB Chemicals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Sanginita Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sanginita Chemicals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Sanginita Chemicals 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 Sanginita Chemicals

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

The idea behind JB Chemicals Pharmaceuticals and Sanginita Chemicals 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.