Correlation Between JS Investments and Thatta Cement

Can any of the company-specific risk be diversified away by investing in both JS Investments and Thatta 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 Thatta 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 Thatta Cement, you can compare the effects of market volatilities on JS Investments and Thatta 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 Thatta Cement. Check out your portfolio center. Please also check ongoing floating volatility patterns of JS Investments and Thatta Cement.

Diversification Opportunities for JS Investments and Thatta Cement

0.08

Correlation Coefficient

JS Investments  Thatta Cement

Significant diversification

The 3 months correlation between JSIL and Thatta is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding JS Investments and Thatta Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thatta 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 Thatta Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thatta Cement has no effect on the direction of JS Investments i.e., JS Investments and Thatta Cement go up and down completely randomly.

Pair Corralation between JS Investments and Thatta Cement

Assuming the 90 days trading horizon JS Investments is expected to generate 1.33 times more return on investment than Thatta Cement. However, JS Investments is 1.33 times more volatile than Thatta Cement. It trades about 0.12 of its potential returns per unit of risk. Thatta Cement is currently generating about -0.36 per unit of risk. If you would invest  2,200  in JS Investments on December 4, 2024 and sell it today you would earn a total of  99.00  from holding JS Investments or generate 4.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	85.71%
Values	Daily Returns

JS Investments  vs.  Thatta 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 somewhat strong basic indicators, JS Investments is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Thatta Cement

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thatta Cement has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Thatta Cement is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with JS Investments and Thatta Cement

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

The idea behind JS Investments and Thatta 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.