Correlation Between JTL Industries and Zuari Agro

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

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

Diversification Opportunities for JTL Industries and Zuari Agro

0.22

Correlation Coefficient

JTL Industries  Zuari Agro

Modest diversification

The 3 months correlation between JTL and Zuari is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding JTL Industries and Zuari Agro Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zuari Agro 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 Zuari Agro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zuari Agro Chemicals has no effect on the direction of JTL Industries i.e., JTL Industries and Zuari Agro go up and down completely randomly.

Pair Corralation between JTL Industries and Zuari Agro

Assuming the 90 days trading horizon JTL Industries is expected to generate 2.47 times less return on investment than Zuari Agro. But when comparing it to its historical volatility, JTL Industries is 1.07 times less risky than Zuari Agro. It trades about 0.02 of its potential returns per unit of risk. Zuari Agro Chemicals is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  13,565  in Zuari Agro Chemicals on December 2, 2024 and sell it today you would earn a total of  4,546  from holding Zuari Agro Chemicals or generate 33.51% return on investment over 90 days.

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

JTL Industries  vs.  Zuari Agro Chemicals

JTL Industries

Risk-Adjusted Performance

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

Zuari Agro Chemicals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zuari Agro Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with JTL Industries and Zuari Agro

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

The idea behind JTL Industries and Zuari Agro 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.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.