Correlation Between Vedanta and JGCHEMICALS

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

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

Diversification Opportunities for Vedanta and JGCHEMICALS

-0.27

Correlation Coefficient

Vedanta  JGCHEMICALS

Very good diversification

The 3 months correlation between Vedanta and JGCHEMICALS is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Vedanta Limited and JGCHEMICALS LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JGCHEMICALS LIMITED and Vedanta 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 Vedanta 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 Vedanta i.e., Vedanta and JGCHEMICALS go up and down completely randomly.

Pair Corralation between Vedanta and JGCHEMICALS

Assuming the 90 days trading horizon Vedanta Limited is expected to generate 0.44 times more return on investment than JGCHEMICALS. However, Vedanta Limited is 2.27 times less risky than JGCHEMICALS. It trades about 0.05 of its potential returns per unit of risk. JGCHEMICALS LIMITED is currently generating about 0.02 per unit of risk. If you would invest  43,939  in Vedanta Limited on September 4, 2024 and sell it today you would earn a total of  2,116  from holding Vedanta Limited or generate 4.82% return on investment over 90 days.

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

Vedanta Limited  vs.  JGCHEMICALS LIMITED

Vedanta Limited

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vedanta Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Vedanta is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

JGCHEMICALS LIMITED

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JGCHEMICALS LIMITED are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical indicators, JGCHEMICALS is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vedanta and JGCHEMICALS

The main advantage of trading using opposite Vedanta and JGCHEMICALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vedanta 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 Vedanta 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 Global Correlations module to find global opportunities by holding instruments from different markets.