Correlation Between JGCHEMICALS and Indo Borax

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

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

Diversification Opportunities for JGCHEMICALS and Indo Borax

0.93

Correlation Coefficient

JGCHEMICALS  Indo Borax

Almost no diversification

The 3 months correlation between JGCHEMICALS and Indo is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding JGCHEMICALS LIMITED and Indo Borax Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indo Borax Chemicals 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 Indo Borax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indo Borax Chemicals has no effect on the direction of JGCHEMICALS i.e., JGCHEMICALS and Indo Borax go up and down completely randomly.

Pair Corralation between JGCHEMICALS and Indo Borax

Assuming the 90 days trading horizon JGCHEMICALS LIMITED is expected to under-perform the Indo Borax. In addition to that, JGCHEMICALS is 1.11 times more volatile than Indo Borax Chemicals. It trades about -0.19 of its total potential returns per unit of risk. Indo Borax Chemicals is currently generating about -0.16 per unit of volatility. If you would invest  20,392  in Indo Borax Chemicals on December 3, 2024 and sell it today you would lose (5,171) from holding Indo Borax Chemicals or give up 25.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.41%
Values	Daily Returns

JGCHEMICALS LIMITED  vs.  Indo Borax Chemicals

JGCHEMICALS LIMITED

Risk-Adjusted Performance

Very Weak

Over the last 90 days JGCHEMICALS LIMITED has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Indo Borax Chemicals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Indo Borax Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with JGCHEMICALS and Indo Borax

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

The idea behind JGCHEMICALS LIMITED and Indo Borax Chemicals 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.