Correlation Between Gujarat Lease and JBM Auto
Can any of the company-specific risk be diversified away by investing in both Gujarat Lease and JBM Auto 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 Gujarat Lease and JBM Auto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gujarat Lease Financing and JBM Auto Limited, you can compare the effects of market volatilities on Gujarat Lease and JBM Auto 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 Gujarat Lease with a short position of JBM Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gujarat Lease and JBM Auto.
Diversification Opportunities for Gujarat Lease and JBM Auto
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Gujarat and JBM is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Gujarat Lease Financing and JBM Auto Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBM Auto Limited and Gujarat Lease 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 Gujarat Lease Financing are associated (or correlated) with JBM Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBM Auto Limited has no effect on the direction of Gujarat Lease i.e., Gujarat Lease and JBM Auto go up and down completely randomly.
Pair Corralation between Gujarat Lease and JBM Auto
Assuming the 90 days trading horizon Gujarat Lease Financing is expected to generate 1.08 times more return on investment than JBM Auto. However, Gujarat Lease is 1.08 times more volatile than JBM Auto Limited. It trades about 0.29 of its potential returns per unit of risk. JBM Auto Limited is currently generating about 0.27 per unit of risk. If you would invest 714.00 in Gujarat Lease Financing on September 12, 2024 and sell it today you would earn a total of 128.00 from holding Gujarat Lease Financing or generate 17.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Gujarat Lease Financing vs. JBM Auto Limited
Performance |
| Timeline |
| Gujarat Lease Financing |
| JBM Auto Limited |
Gujarat Lease and JBM Auto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gujarat Lease and JBM Auto
The main advantage of trading using opposite Gujarat Lease and JBM Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gujarat Lease position performs unexpectedly, JBM Auto 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 JBM Auto will offset losses from the drop in JBM Auto's long position.| Gujarat Lease vs. Shyam Metalics and | Gujarat Lease vs. Sintex Plastics Technology | Gujarat Lease vs. LLOYDS METALS AND | Gujarat Lease vs. Embassy Office Parks |
| JBM Auto vs. Pritish Nandy Communications | JBM Auto vs. Gujarat Lease Financing | JBM Auto vs. Gujarat Fluorochemicals Limited | JBM Auto vs. Mangalore Chemicals Fertilizers |
Check out your portfolio center.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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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