Correlation Between Nimir Industrial and JS Investments

Can any of the company-specific risk be diversified away by investing in both Nimir Industrial and JS Investments 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 Nimir Industrial and JS Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nimir Industrial Chemical and JS Investments, you can compare the effects of market volatilities on Nimir Industrial and JS Investments 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 Nimir Industrial with a short position of JS Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nimir Industrial and JS Investments.

Diversification Opportunities for Nimir Industrial and JS Investments

0.2

Correlation Coefficient

Nimir Industrial  JS Investments

Modest diversification

The 3 months correlation between Nimir and JSIL is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Nimir Industrial Chemical and JS Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JS Investments and Nimir Industrial 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 Nimir Industrial Chemical are associated (or correlated) with JS Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JS Investments has no effect on the direction of Nimir Industrial i.e., Nimir Industrial and JS Investments go up and down completely randomly.

Pair Corralation between Nimir Industrial and JS Investments

Assuming the 90 days trading horizon Nimir Industrial Chemical is expected to generate 0.75 times more return on investment than JS Investments. However, Nimir Industrial Chemical is 1.34 times less risky than JS Investments. It trades about -0.01 of its potential returns per unit of risk. JS Investments is currently generating about -0.02 per unit of risk. If you would invest  14,432  in Nimir Industrial Chemical on December 29, 2024 and sell it today you would lose (583.00) from holding Nimir Industrial Chemical or give up 4.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.65%
Values	Daily Returns

Nimir Industrial Chemical  vs.  JS Investments

Nimir Industrial Chemical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nimir Industrial Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Nimir Industrial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

JS Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days JS Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, JS Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nimir Industrial and JS Investments

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

The idea behind Nimir Industrial Chemical and JS Investments 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 Global Correlations module to find global opportunities by holding instruments from different markets.