Correlation Between JNK India and Alivus Life

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

By analyzing existing cross correlation between JNK India and Alivus Life Sciences, you can compare the effects of market volatilities on JNK India and Alivus Life 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 JNK India with a short position of Alivus Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of JNK India and Alivus Life.

Diversification Opportunities for JNK India and Alivus Life

0.45

Correlation Coefficient

JNK India  Alivus Life

Very weak diversification

The 3 months correlation between JNK and Alivus is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding JNK India and Alivus Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alivus Life Sciences and JNK India 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 JNK India are associated (or correlated) with Alivus Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alivus Life Sciences has no effect on the direction of JNK India i.e., JNK India and Alivus Life go up and down completely randomly.

Pair Corralation between JNK India and Alivus Life

Assuming the 90 days trading horizon JNK India is expected to under-perform the Alivus Life. In addition to that, JNK India is 1.2 times more volatile than Alivus Life Sciences. It trades about -0.18 of its total potential returns per unit of risk. Alivus Life Sciences is currently generating about 0.04 per unit of volatility. If you would invest  98,880  in Alivus Life Sciences on December 26, 2024 and sell it today you would earn a total of  3,775  from holding Alivus Life Sciences or generate 3.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	80.65%
Values	Daily Returns

JNK India  vs.  Alivus Life Sciences

JNK India

Risk-Adjusted Performance

Very Weak

Over the last 90 days JNK India has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Alivus Life Sciences

Risk-Adjusted Performance

Insignificant

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

Pair Trading with JNK India and Alivus Life

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

The idea behind JNK India and Alivus Life Sciences 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.