Correlation Between JGCHEMICALS and Agro Phos

Can any of the company-specific risk be diversified away by investing in both JGCHEMICALS and Agro Phos 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 JGCHEMICALS and Agro Phos into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JGCHEMICALS LIMITED and Agro Phos India, you can compare the effects of market volatilities on JGCHEMICALS and Agro Phos 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 JGCHEMICALS with a short position of Agro Phos. Check out your portfolio center. Please also check ongoing floating volatility patterns of JGCHEMICALS and Agro Phos.

Diversification Opportunities for JGCHEMICALS and Agro Phos

-0.32

Correlation Coefficient

JGCHEMICALS  Agro Phos

Very good diversification

The 3 months correlation between JGCHEMICALS and Agro is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding JGCHEMICALS LIMITED and Agro Phos India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agro Phos India and JGCHEMICALS 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 JGCHEMICALS LIMITED are associated (or correlated) with Agro Phos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agro Phos India has no effect on the direction of JGCHEMICALS i.e., JGCHEMICALS and Agro Phos go up and down completely randomly.

Pair Corralation between JGCHEMICALS and Agro Phos

Assuming the 90 days trading horizon JGCHEMICALS LIMITED is expected to generate 1.36 times more return on investment than Agro Phos. However, JGCHEMICALS is 1.36 times more volatile than Agro Phos India. It trades about 0.02 of its potential returns per unit of risk. Agro Phos India is currently generating about -0.06 per unit of risk. If you would invest  39,120  in JGCHEMICALS LIMITED on October 10, 2024 and sell it today you would lose (195.00) from holding JGCHEMICALS LIMITED or give up 0.5% of portfolio value over 90 days.

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

JGCHEMICALS LIMITED  vs.  Agro Phos India

JGCHEMICALS LIMITED

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JGCHEMICALS LIMITED are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical indicators, JGCHEMICALS is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Agro Phos India

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agro Phos India has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with JGCHEMICALS and Agro Phos

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

The idea behind JGCHEMICALS LIMITED and Agro Phos India 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.