Correlation Between Silly Monks and Jai Balaji

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

By analyzing existing cross correlation between Silly Monks Entertainment and Jai Balaji Industries, you can compare the effects of market volatilities on Silly Monks and Jai Balaji 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 Silly Monks with a short position of Jai Balaji. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silly Monks and Jai Balaji.

Diversification Opportunities for Silly Monks and Jai Balaji

0.8

Correlation Coefficient

Silly Monks  Jai Balaji

Very poor diversification

The 3 months correlation between Silly and Jai is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Silly Monks Entertainment and Jai Balaji Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jai Balaji Industries and Silly Monks 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 Silly Monks Entertainment are associated (or correlated) with Jai Balaji. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jai Balaji Industries has no effect on the direction of Silly Monks i.e., Silly Monks and Jai Balaji go up and down completely randomly.

Pair Corralation between Silly Monks and Jai Balaji

Assuming the 90 days trading horizon Silly Monks Entertainment is expected to under-perform the Jai Balaji. But the stock apears to be less risky and, when comparing its historical volatility, Silly Monks Entertainment is 1.18 times less risky than Jai Balaji. The stock trades about -0.25 of its potential returns per unit of risk. The Jai Balaji Industries is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  18,021  in Jai Balaji Industries on December 27, 2024 and sell it today you would lose (4,189) from holding Jai Balaji Industries or give up 23.25% of portfolio value over 90 days.

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

Silly Monks Entertainment  vs.  Jai Balaji Industries

Silly Monks Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Silly Monks Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Jai Balaji Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jai Balaji Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic 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 Silly Monks and Jai Balaji

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

The idea behind Silly Monks Entertainment and Jai Balaji 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.