Correlation Between JGCHEMICALS and Gujarat Narmada

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

By analyzing existing cross correlation between JGCHEMICALS LIMITED and Gujarat Narmada Valley, you can compare the effects of market volatilities on JGCHEMICALS and Gujarat Narmada 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 Gujarat Narmada. Check out your portfolio center. Please also check ongoing floating volatility patterns of JGCHEMICALS and Gujarat Narmada.

Diversification Opportunities for JGCHEMICALS and Gujarat Narmada

-0.06

Correlation Coefficient

JGCHEMICALS  Gujarat Narmada

Good diversification

The 3 months correlation between JGCHEMICALS and Gujarat is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding JGCHEMICALS LIMITED and Gujarat Narmada Valley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gujarat Narmada Valley 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 Gujarat Narmada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gujarat Narmada Valley has no effect on the direction of JGCHEMICALS i.e., JGCHEMICALS and Gujarat Narmada go up and down completely randomly.

Pair Corralation between JGCHEMICALS and Gujarat Narmada

Assuming the 90 days trading horizon JGCHEMICALS LIMITED is expected to under-perform the Gujarat Narmada. In addition to that, JGCHEMICALS is 1.53 times more volatile than Gujarat Narmada Valley. It trades about -0.26 of its total potential returns per unit of risk. Gujarat Narmada Valley is currently generating about -0.36 per unit of volatility. If you would invest  62,240  in Gujarat Narmada Valley on October 8, 2024 and sell it today you would lose (5,540) from holding Gujarat Narmada Valley or give up 8.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

JGCHEMICALS LIMITED  vs.  Gujarat Narmada Valley

JGCHEMICALS LIMITED

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JGCHEMICALS LIMITED are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical indicators, JGCHEMICALS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Gujarat Narmada Valley

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gujarat Narmada Valley has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with JGCHEMICALS and Gujarat Narmada

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

The idea behind JGCHEMICALS LIMITED and Gujarat Narmada Valley 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 Stocks Directory module to find actively traded stocks across global markets.