Correlation Between Refex Industries and Jubilant Foodworks

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

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

Diversification Opportunities for Refex Industries and Jubilant Foodworks

0.21

Correlation Coefficient

Refex Industries  Jubilant Foodworks

Modest diversification

The 3 months correlation between Refex and Jubilant is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Refex Industries Limited and Jubilant Foodworks Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jubilant Foodworks and Refex 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 Refex Industries Limited are associated (or correlated) with Jubilant Foodworks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jubilant Foodworks has no effect on the direction of Refex Industries i.e., Refex Industries and Jubilant Foodworks go up and down completely randomly.

Pair Corralation between Refex Industries and Jubilant Foodworks

Assuming the 90 days trading horizon Refex Industries Limited is expected to under-perform the Jubilant Foodworks. In addition to that, Refex Industries is 1.12 times more volatile than Jubilant Foodworks Limited. It trades about -0.19 of its total potential returns per unit of risk. Jubilant Foodworks Limited is currently generating about 0.17 per unit of volatility. If you would invest  70,220  in Jubilant Foodworks Limited on October 11, 2024 and sell it today you would earn a total of  4,820  from holding Jubilant Foodworks Limited or generate 6.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Refex Industries Limited  vs.  Jubilant Foodworks Limited

Refex Industries

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Refex Industries Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Refex Industries is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Jubilant Foodworks

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jubilant Foodworks Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Jubilant Foodworks displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Refex Industries and Jubilant Foodworks

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

The idea behind Refex Industries Limited and Jubilant Foodworks 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.