Correlation Between JGCHEMICALS and Global Health

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

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

Diversification Opportunities for JGCHEMICALS and Global Health

0.52

Correlation Coefficient

JGCHEMICALS  Global Health

Very weak diversification

The 3 months correlation between JGCHEMICALS and Global is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding JGCHEMICALS LIMITED and Global Health Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Health Limited 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 Global Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Health Limited has no effect on the direction of JGCHEMICALS i.e., JGCHEMICALS and Global Health go up and down completely randomly.

Pair Corralation between JGCHEMICALS and Global Health

Assuming the 90 days trading horizon JGCHEMICALS is expected to generate 1.13 times less return on investment than Global Health. In addition to that, JGCHEMICALS is 2.14 times more volatile than Global Health Limited. It trades about 0.03 of its total potential returns per unit of risk. Global Health Limited is currently generating about 0.08 per unit of volatility. If you would invest  102,255  in Global Health Limited on September 28, 2024 and sell it today you would earn a total of  8,510  from holding Global Health Limited or generate 8.32% return on investment over 90 days.

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

JGCHEMICALS LIMITED  vs.  Global Health Limited

JGCHEMICALS LIMITED

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JGCHEMICALS LIMITED are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent technical indicators, JGCHEMICALS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Global Health Limited

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Health Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Global Health may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with JGCHEMICALS and Global Health

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

The idea behind JGCHEMICALS LIMITED and Global Health 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.