Correlation Between JS Investments and Agritech
Can any of the company-specific risk be diversified away by investing in both JS Investments and Agritech 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 JS Investments and Agritech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JS Investments and Agritech, you can compare the effects of market volatilities on JS Investments and Agritech 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 JS Investments with a short position of Agritech. Check out your portfolio center. Please also check ongoing floating volatility patterns of JS Investments and Agritech.
Diversification Opportunities for JS Investments and Agritech
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between JSIL and Agritech is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding JS Investments and Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agritech and JS Investments 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 JS Investments are associated (or correlated) with Agritech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agritech has no effect on the direction of JS Investments i.e., JS Investments and Agritech go up and down completely randomly.
Pair Corralation between JS Investments and Agritech
Assuming the 90 days trading horizon JS Investments is expected to generate 2.28 times more return on investment than Agritech. However, JS Investments is 2.28 times more volatile than Agritech. It trades about 0.16 of its potential returns per unit of risk. Agritech is currently generating about 0.02 per unit of risk. If you would invest 2,125 in JS Investments on September 14, 2024 and sell it today you would earn a total of 245.00 from holding JS Investments or generate 11.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JS Investments vs. Agritech
Performance |
| Timeline |
| JS Investments |
| Agritech |
JS Investments and Agritech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JS Investments and Agritech
The main advantage of trading using opposite JS Investments and Agritech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JS Investments position performs unexpectedly, Agritech 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 Agritech will offset losses from the drop in Agritech's long position.| JS Investments vs. Masood Textile Mills | JS Investments vs. Fauji Foods | JS Investments vs. KSB Pumps | JS Investments vs. Mari Petroleum |
| Agritech vs. Masood Textile Mills | Agritech vs. Fauji Foods | Agritech vs. KSB Pumps | Agritech vs. Mari Petroleum |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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