Correlation Between JS Investments and Bestway Cement

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

By analyzing existing cross correlation between JS Investments and Bestway Cement, you can compare the effects of market volatilities on JS Investments and Bestway Cement 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 JS Investments with a short position of Bestway Cement. Check out your portfolio center. Please also check ongoing floating volatility patterns of JS Investments and Bestway Cement.

Diversification Opportunities for JS Investments and Bestway Cement

-0.39

Correlation Coefficient

JS Investments  Bestway Cement

Very good diversification

The 3 months correlation between JSIL and Bestway is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding JS Investments and Bestway Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bestway Cement and JS Investments 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 JS Investments are associated (or correlated) with Bestway Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bestway Cement has no effect on the direction of JS Investments i.e., JS Investments and Bestway Cement go up and down completely randomly.

Pair Corralation between JS Investments and Bestway Cement

Assuming the 90 days trading horizon JS Investments is expected to under-perform the Bestway Cement. In addition to that, JS Investments is 2.63 times more volatile than Bestway Cement. It trades about -0.04 of its total potential returns per unit of risk. Bestway Cement is currently generating about 0.13 per unit of volatility. If you would invest  34,219  in Bestway Cement on December 23, 2024 and sell it today you would earn a total of  3,841  from holding Bestway Cement or generate 11.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

JS Investments  vs.  Bestway Cement

JS Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days JS Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Bestway Cement

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bestway Cement are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bestway Cement may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with JS Investments and Bestway Cement

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

The idea behind JS Investments and Bestway Cement 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .