Correlation Between Jai Balaji and Hi Tech

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Can any of the company-specific risk be diversified away by investing in both Jai Balaji and Hi Tech 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 Jai Balaji and Hi Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jai Balaji Industries and Hi Tech Pipes Limited, you can compare the effects of market volatilities on Jai Balaji and Hi Tech 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 Jai Balaji with a short position of Hi Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jai Balaji and Hi Tech.

Diversification Opportunities for Jai Balaji and Hi Tech

0.16
  Correlation Coefficient

Average diversification

The 3 months correlation between Jai and HITECH is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Jai Balaji Industries and Hi Tech Pipes Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hi Tech Pipes and Jai Balaji 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 Jai Balaji Industries are associated (or correlated) with Hi Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hi Tech Pipes has no effect on the direction of Jai Balaji i.e., Jai Balaji and Hi Tech go up and down completely randomly.

Pair Corralation between Jai Balaji and Hi Tech

Assuming the 90 days trading horizon Jai Balaji Industries is expected to under-perform the Hi Tech. But the stock apears to be less risky and, when comparing its historical volatility, Jai Balaji Industries is 1.13 times less risky than Hi Tech. The stock trades about -0.28 of its potential returns per unit of risk. The Hi Tech Pipes Limited is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest  15,277  in Hi Tech Pipes Limited on October 23, 2024 and sell it today you would lose (1,560) from holding Hi Tech Pipes Limited or give up 10.21% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.0%
ValuesDaily Returns

Jai Balaji Industries  vs.  Hi Tech Pipes Limited

 Performance 
       Timeline  
Jai Balaji Industries 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Jai Balaji Industries are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Jai Balaji sustained solid returns over the last few months and may actually be approaching a breakup point.
Hi Tech Pipes 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Hi Tech Pipes Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Jai Balaji and Hi Tech Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Jai Balaji and Hi Tech

The main advantage of trading using opposite Jai Balaji and Hi Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jai Balaji position performs unexpectedly, Hi Tech 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 Hi Tech will offset losses from the drop in Hi Tech's long position.
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The idea behind Jai Balaji Industries and Hi Tech Pipes 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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