Correlation Between Malu Paper and JTL Industries

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

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

Diversification Opportunities for Malu Paper and JTL Industries

0.82

Correlation Coefficient

Malu Paper  JTL Industries

Very poor diversification

The 3 months correlation between Malu and JTL is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Malu Paper Mills and JTL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JTL Industries and Malu Paper 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 Malu Paper Mills are associated (or correlated) with JTL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JTL Industries has no effect on the direction of Malu Paper i.e., Malu Paper and JTL Industries go up and down completely randomly.

Pair Corralation between Malu Paper and JTL Industries

Assuming the 90 days trading horizon Malu Paper Mills is expected to under-perform the JTL Industries. But the stock apears to be less risky and, when comparing its historical volatility, Malu Paper Mills is 1.02 times less risky than JTL Industries. The stock trades about -0.12 of its potential returns per unit of risk. The JTL Industries is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  9,524  in JTL Industries on December 25, 2024 and sell it today you would lose (1,565) from holding JTL Industries or give up 16.43% of portfolio value over 90 days.

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

Malu Paper Mills  vs.  JTL Industries

Malu Paper Mills

Risk-Adjusted Performance

Very Weak

Over the last 90 days Malu Paper Mills has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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.

Pair Trading with Malu Paper and JTL Industries

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

The idea behind Malu Paper Mills and JTL Industries 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.