Correlation Between JGCHEMICALS and RITES

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

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

Diversification Opportunities for JGCHEMICALS and RITES

0.69

Correlation Coefficient

JGCHEMICALS  RITES

Poor diversification

The 3 months correlation between JGCHEMICALS and RITES is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding JGCHEMICALS LIMITED and RITES Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RITES 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 RITES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RITES Limited has no effect on the direction of JGCHEMICALS i.e., JGCHEMICALS and RITES go up and down completely randomly.

Pair Corralation between JGCHEMICALS and RITES

Assuming the 90 days trading horizon JGCHEMICALS LIMITED is expected to under-perform the RITES. But the stock apears to be less risky and, when comparing its historical volatility, JGCHEMICALS LIMITED is 1.05 times less risky than RITES. The stock trades about -0.12 of its potential returns per unit of risk. The RITES Limited is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  27,779  in RITES Limited on December 27, 2024 and sell it today you would lose (4,715) from holding RITES Limited or give up 16.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

JGCHEMICALS LIMITED  vs.  RITES Limited

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 weak 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.

RITES Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days RITES Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with JGCHEMICALS and RITES

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

The idea behind JGCHEMICALS LIMITED and RITES 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.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.