Correlation Between JGCHEMICALS and Centum Electronics

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

Diversification Opportunities for JGCHEMICALS and Centum Electronics

-0.26
  Correlation Coefficient

Very good diversification

The 3 months correlation between JGCHEMICALS and Centum is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding JGCHEMICALS LIMITED and Centum Electronics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centum Electronics and JGCHEMICALS 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 JGCHEMICALS LIMITED are associated (or correlated) with Centum Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centum Electronics has no effect on the direction of JGCHEMICALS i.e., JGCHEMICALS and Centum Electronics go up and down completely randomly.

Pair Corralation between JGCHEMICALS and Centum Electronics

Assuming the 90 days trading horizon JGCHEMICALS LIMITED is expected to generate 2.15 times more return on investment than Centum Electronics. However, JGCHEMICALS is 2.15 times more volatile than Centum Electronics Limited. It trades about 0.22 of its potential returns per unit of risk. Centum Electronics Limited is currently generating about -0.22 per unit of risk. If you would invest  35,550  in JGCHEMICALS LIMITED on September 4, 2024 and sell it today you would earn a total of  8,455  from holding JGCHEMICALS LIMITED or generate 23.78% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

JGCHEMICALS LIMITED  vs.  Centum Electronics Limited

 Performance 
       Timeline  
JGCHEMICALS LIMITED 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in JGCHEMICALS LIMITED are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical indicators, JGCHEMICALS is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
Centum Electronics 

Risk-Adjusted Performance

0 of 100

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

JGCHEMICALS and Centum Electronics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JGCHEMICALS and Centum Electronics

The main advantage of trading using opposite JGCHEMICALS and Centum Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JGCHEMICALS position performs unexpectedly, Centum Electronics 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 Centum Electronics will offset losses from the drop in Centum Electronics' long position.
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The idea behind JGCHEMICALS LIMITED and Centum Electronics 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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