Correlation Between Indian Oil and JM Financial
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By analyzing existing cross correlation between Indian Oil and JM Financial Limited, you can compare the effects of market volatilities on Indian Oil and JM Financial 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 Indian Oil with a short position of JM Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indian Oil and JM Financial.
Diversification Opportunities for Indian Oil and JM Financial
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Indian and JMFINANCIL is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Indian Oil and JM Financial Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JM Financial Limited and Indian Oil 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 Indian Oil are associated (or correlated) with JM Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JM Financial Limited has no effect on the direction of Indian Oil i.e., Indian Oil and JM Financial go up and down completely randomly.
Pair Corralation between Indian Oil and JM Financial
Assuming the 90 days trading horizon Indian Oil is expected to under-perform the JM Financial. But the stock apears to be less risky and, when comparing its historical volatility, Indian Oil is 1.69 times less risky than JM Financial. The stock trades about -0.11 of its potential returns per unit of risk. The JM Financial Limited is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 9,613 in JM Financial Limited on October 21, 2024 and sell it today you would earn a total of 2,114 from holding JM Financial Limited or generate 21.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.2% |
| Values | Daily Returns |
Indian Oil vs. JM Financial Limited
Performance |
| Timeline |
| Indian Oil |
| JM Financial Limited |
Indian Oil and JM Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indian Oil and JM Financial
The main advantage of trading using opposite Indian Oil and JM Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indian Oil position performs unexpectedly, JM Financial 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 JM Financial will offset losses from the drop in JM Financial's long position.| Indian Oil vs. Thirumalai Chemicals Limited | Indian Oil vs. Zodiac Clothing | Indian Oil vs. Dhunseri Investments Limited | Indian Oil vs. POWERGRID Infrastructure Investment |
| JM Financial vs. LT Technology Services | JM Financial vs. Rajnandini Metal Limited | JM Financial vs. Cambridge Technology Enterprises | JM Financial vs. Hilton Metal Forging |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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