Correlation Between JTL Industries and Genus Paper

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

By analyzing existing cross correlation between JTL Industries and Genus Paper Boards, you can compare the effects of market volatilities on JTL Industries and Genus Paper 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 JTL Industries with a short position of Genus Paper. Check out your portfolio center. Please also check ongoing floating volatility patterns of JTL Industries and Genus Paper.

Diversification Opportunities for JTL Industries and Genus Paper

0.08

Correlation Coefficient

JTL Industries  Genus Paper

Significant diversification

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

Pair Corralation between JTL Industries and Genus Paper

Assuming the 90 days trading horizon JTL Industries is expected to generate 1.15 times more return on investment than Genus Paper. However, JTL Industries is 1.15 times more volatile than Genus Paper Boards. It trades about 0.07 of its potential returns per unit of risk. Genus Paper Boards is currently generating about -0.07 per unit of risk. If you would invest  9,864  in JTL Industries on October 23, 2024 and sell it today you would earn a total of  1,100  from holding JTL Industries or generate 11.15% return on investment over 90 days.

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

JTL Industries  vs.  Genus Paper Boards

JTL Industries

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JTL Industries are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating forward indicators, JTL Industries sustained solid returns over the last few months and may actually be approaching a breakup point.

Genus Paper Boards

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genus Paper Boards has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady 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.

Pair Trading with JTL Industries and Genus Paper

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

The idea behind JTL Industries and Genus Paper Boards 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.