Correlation Between JTL Industries and Oriental Carbon

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

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

Diversification Opportunities for JTL Industries and Oriental Carbon

0.65

Correlation Coefficient

JTL Industries  Oriental Carbon

Poor diversification

The 3 months correlation between JTL and Oriental is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding JTL Industries and Oriental Carbon Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Carbon 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 Oriental Carbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Carbon Chemicals has no effect on the direction of JTL Industries i.e., JTL Industries and Oriental Carbon go up and down completely randomly.

Pair Corralation between JTL Industries and Oriental Carbon

Assuming the 90 days trading horizon JTL Industries is expected to generate 1.39 times less return on investment than Oriental Carbon. But when comparing it to its historical volatility, JTL Industries is 1.48 times less risky than Oriental Carbon. It trades about 0.18 of its potential returns per unit of risk. Oriental Carbon Chemicals is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  22,915  in Oriental Carbon Chemicals on September 19, 2024 and sell it today you would earn a total of  1,696  from holding Oriental Carbon Chemicals or generate 7.4% return on investment over 90 days.

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

JTL Industries  vs.  Oriental Carbon Chemicals

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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Oriental Carbon Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oriental Carbon Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Oriental Carbon is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with JTL Industries and Oriental Carbon

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

The idea behind JTL Industries and Oriental Carbon Chemicals 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.