Correlation Between JS Investments and Habib Sugar

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

By analyzing existing cross correlation between JS Investments and Habib Sugar Mills, you can compare the effects of market volatilities on JS Investments and Habib Sugar 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 Habib Sugar. Check out your portfolio center. Please also check ongoing floating volatility patterns of JS Investments and Habib Sugar.

Diversification Opportunities for JS Investments and Habib Sugar

0.14

Correlation Coefficient

JS Investments  Habib Sugar

Average diversification

The 3 months correlation between JSIL and Habib is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding JS Investments and Habib Sugar Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Habib Sugar Mills 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 Habib Sugar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Habib Sugar Mills has no effect on the direction of JS Investments i.e., JS Investments and Habib Sugar go up and down completely randomly.

Pair Corralation between JS Investments and Habib Sugar

Assuming the 90 days trading horizon JS Investments is expected to generate 2.12 times more return on investment than Habib Sugar. However, JS Investments is 2.12 times more volatile than Habib Sugar Mills. It trades about -0.04 of its potential returns per unit of risk. Habib Sugar Mills is currently generating about -0.09 per unit of risk. If you would invest  2,472  in JS Investments on December 23, 2024 and sell it today you would lose (278.00) from holding JS Investments or give up 11.25% of portfolio value over 90 days.

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

JS Investments  vs.  Habib Sugar Mills

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.

Habib Sugar Mills

Risk-Adjusted Performance

Very Weak

Over the last 90 days Habib Sugar Mills has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with JS Investments and Habib Sugar

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

The idea behind JS Investments and Habib Sugar Mills 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.