Correlation Between Orissa Minerals and JGCHEMICALS

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

By analyzing existing cross correlation between The Orissa Minerals and JGCHEMICALS LIMITED, you can compare the effects of market volatilities on Orissa Minerals and JGCHEMICALS 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 Orissa Minerals with a short position of JGCHEMICALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orissa Minerals and JGCHEMICALS.

Diversification Opportunities for Orissa Minerals and JGCHEMICALS

-0.06

Correlation Coefficient

Orissa Minerals  JGCHEMICALS

Good diversification

The 3 months correlation between Orissa and JGCHEMICALS is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding The Orissa Minerals and JGCHEMICALS LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JGCHEMICALS LIMITED and Orissa Minerals 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 The Orissa Minerals are associated (or correlated) with JGCHEMICALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JGCHEMICALS LIMITED has no effect on the direction of Orissa Minerals i.e., Orissa Minerals and JGCHEMICALS go up and down completely randomly.

Pair Corralation between Orissa Minerals and JGCHEMICALS

Assuming the 90 days trading horizon The Orissa Minerals is expected to under-perform the JGCHEMICALS. But the stock apears to be less risky and, when comparing its historical volatility, The Orissa Minerals is 1.64 times less risky than JGCHEMICALS. The stock trades about -0.01 of its potential returns per unit of risk. The JGCHEMICALS LIMITED is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  43,960  in JGCHEMICALS LIMITED on September 12, 2024 and sell it today you would earn a total of  1,490  from holding JGCHEMICALS LIMITED or generate 3.39% return on investment over 90 days.

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

The Orissa Minerals  vs.  JGCHEMICALS LIMITED

Orissa Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Orissa Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Orissa Minerals is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

JGCHEMICALS LIMITED

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Orissa Minerals and JGCHEMICALS

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

The idea behind The Orissa Minerals and JGCHEMICALS 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.

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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.