Correlation Between JBM Auto and Sukhjit Starch

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

Diversification Opportunities for JBM Auto and Sukhjit Starch

0.84
  Correlation Coefficient

Very poor diversification

The 3 months correlation between JBM and Sukhjit is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding JBM Auto Limited and Sukhjit Starch Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sukhjit Starch Chemicals and JBM Auto 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 JBM Auto Limited are associated (or correlated) with Sukhjit Starch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sukhjit Starch Chemicals has no effect on the direction of JBM Auto i.e., JBM Auto and Sukhjit Starch go up and down completely randomly.

Pair Corralation between JBM Auto and Sukhjit Starch

Assuming the 90 days trading horizon JBM Auto Limited is expected to generate 1.69 times more return on investment than Sukhjit Starch. However, JBM Auto is 1.69 times more volatile than Sukhjit Starch Chemicals. It trades about -0.08 of its potential returns per unit of risk. Sukhjit Starch Chemicals is currently generating about -0.18 per unit of risk. If you would invest  68,745  in JBM Auto Limited on November 28, 2024 and sell it today you would lose (8,245) from holding JBM Auto Limited or give up 11.99% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.45%
ValuesDaily Returns

JBM Auto Limited  vs.  Sukhjit Starch Chemicals

 Performance 
       Timeline  
JBM Auto Limited 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days JBM Auto Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
Sukhjit Starch Chemicals 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Sukhjit Starch Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

JBM Auto and Sukhjit Starch Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JBM Auto and Sukhjit Starch

The main advantage of trading using opposite JBM Auto and Sukhjit Starch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JBM Auto position performs unexpectedly, Sukhjit Starch 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 Sukhjit Starch will offset losses from the drop in Sukhjit Starch's long position.
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The idea behind JBM Auto Limited and Sukhjit Starch Chemicals 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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