Correlation Between JTL Industries and Neogen Chemicals

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

By analyzing existing cross correlation between JTL Industries and Neogen Chemicals Limited, you can compare the effects of market volatilities on JTL Industries and Neogen Chemicals 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 Neogen Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of JTL Industries and Neogen Chemicals.

Diversification Opportunities for JTL Industries and Neogen Chemicals

0.12

Correlation Coefficient

JTL Industries  Neogen Chemicals

Average diversification

The 3 months correlation between JTL and Neogen is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding JTL Industries and Neogen Chemicals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neogen Chemicals 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 Neogen Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neogen Chemicals has no effect on the direction of JTL Industries i.e., JTL Industries and Neogen Chemicals go up and down completely randomly.

Pair Corralation between JTL Industries and Neogen Chemicals

Assuming the 90 days trading horizon JTL Industries is expected to under-perform the Neogen Chemicals. In addition to that, JTL Industries is 1.41 times more volatile than Neogen Chemicals Limited. It trades about -0.01 of its total potential returns per unit of risk. Neogen Chemicals Limited is currently generating about 0.06 per unit of volatility. If you would invest  129,473  in Neogen Chemicals Limited on October 3, 2024 and sell it today you would earn a total of  93,642  from holding Neogen Chemicals Limited or generate 72.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.57%
Values	Daily Returns

JTL Industries  vs.  Neogen Chemicals Limited

JTL Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JTL Industries 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 forward indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Neogen Chemicals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Neogen Chemicals Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Neogen Chemicals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with JTL Industries and Neogen Chemicals

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

The idea behind JTL Industries and Neogen Chemicals Limited 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.