Correlation Between Zensar Technologies and Jubilant Foodworks

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

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

Diversification Opportunities for Zensar Technologies and Jubilant Foodworks

0.67

Correlation Coefficient

Zensar Technologies  Jubilant Foodworks

Poor diversification

The 3 months correlation between Zensar and Jubilant is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Zensar Technologies 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 Zensar Technologies 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 Zensar Technologies 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 Zensar Technologies i.e., Zensar Technologies and Jubilant Foodworks go up and down completely randomly.

Pair Corralation between Zensar Technologies and Jubilant Foodworks

Assuming the 90 days trading horizon Zensar Technologies Limited is expected to generate 1.34 times more return on investment than Jubilant Foodworks. However, Zensar Technologies is 1.34 times more volatile than Jubilant Foodworks Limited. It trades about 0.06 of its potential returns per unit of risk. Jubilant Foodworks Limited is currently generating about 0.07 per unit of risk. If you would invest  53,780  in Zensar Technologies Limited on October 5, 2024 and sell it today you would earn a total of  25,630  from holding Zensar Technologies Limited or generate 47.66% return on investment over 90 days.

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

Zensar Technologies Limited  vs.  Jubilant Foodworks Limited

Zensar Technologies

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zensar Technologies Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Zensar Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Jubilant Foodworks

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jubilant Foodworks Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Jubilant Foodworks displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zensar Technologies and Jubilant Foodworks

The main advantage of trading using opposite Zensar Technologies and Jubilant Foodworks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zensar Technologies 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 Zensar Technologies 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.