Correlation Between PI Industries and JGCHEMICALS

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

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

Diversification Opportunities for PI Industries and JGCHEMICALS

0.71

Correlation Coefficient

PI Industries  JGCHEMICALS

Poor diversification

The 3 months correlation between PIIND and JGCHEMICALS is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding PI Industries Limited and JGCHEMICALS LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JGCHEMICALS LIMITED and PI 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 PI Industries Limited 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 PI Industries i.e., PI Industries and JGCHEMICALS go up and down completely randomly.

Pair Corralation between PI Industries and JGCHEMICALS

Assuming the 90 days trading horizon PI Industries Limited is expected to generate 0.58 times more return on investment than JGCHEMICALS. However, PI Industries Limited is 1.74 times less risky than JGCHEMICALS. It trades about -0.07 of its potential returns per unit of risk. JGCHEMICALS LIMITED is currently generating about -0.12 per unit of risk. If you would invest  373,729  in PI Industries Limited on December 27, 2024 and sell it today you would lose (30,924) from holding PI Industries Limited or give up 8.27% of portfolio value over 90 days.

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

PI Industries Limited  vs.  JGCHEMICALS LIMITED

PI Industries Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days PI Industries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

JGCHEMICALS LIMITED

Risk-Adjusted Performance

Very Weak

Over the last 90 days JGCHEMICALS LIMITED has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical 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 PI Industries and JGCHEMICALS

The main advantage of trading using opposite PI Industries and JGCHEMICALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PI Industries 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 PI Industries Limited 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.