Correlation Between JGCHEMICALS and Viceroy Hotels

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

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

Diversification Opportunities for JGCHEMICALS and Viceroy Hotels

-0.25

Correlation Coefficient

JGCHEMICALS  Viceroy Hotels

Very good diversification

The 3 months correlation between JGCHEMICALS and Viceroy is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding JGCHEMICALS LIMITED and Viceroy Hotels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viceroy Hotels 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 Viceroy Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viceroy Hotels has no effect on the direction of JGCHEMICALS i.e., JGCHEMICALS and Viceroy Hotels go up and down completely randomly.

Pair Corralation between JGCHEMICALS and Viceroy Hotels

Assuming the 90 days trading horizon JGCHEMICALS is expected to generate 1.18 times less return on investment than Viceroy Hotels. In addition to that, JGCHEMICALS is 1.47 times more volatile than Viceroy Hotels Limited. It trades about 0.09 of its total potential returns per unit of risk. Viceroy Hotels Limited is currently generating about 0.16 per unit of volatility. If you would invest  5,550  in Viceroy Hotels Limited on October 9, 2024 and sell it today you would earn a total of  6,046  from holding Viceroy Hotels Limited or generate 108.94% return on investment over 90 days.

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

JGCHEMICALS LIMITED  vs.  Viceroy Hotels 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 unfluctuating technical indicators, JGCHEMICALS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Viceroy Hotels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Viceroy Hotels Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Viceroy Hotels is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with JGCHEMICALS and Viceroy Hotels

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

The idea behind JGCHEMICALS LIMITED and Viceroy Hotels 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.