Correlation Between JTL Industries and Bkm Industries

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

Diversification Opportunities for JTL Industries and Bkm Industries

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between JTL and Bkm is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding JTL Industries and Bkm Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bkm Industries and JTL Industries 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 JTL Industries are associated (or correlated) with Bkm Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bkm Industries has no effect on the direction of JTL Industries i.e., JTL Industries and Bkm Industries go up and down completely randomly.

Pair Corralation between JTL Industries and Bkm Industries

Assuming the 90 days trading horizon JTL Industries is expected to generate 6.65 times less return on investment than Bkm Industries. But when comparing it to its historical volatility, JTL Industries is 1.28 times less risky than Bkm Industries. It trades about 0.01 of its potential returns per unit of risk. Bkm Industries Limited is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,250  in Bkm Industries Limited on December 11, 2024 and sell it today you would earn a total of  2,250  from holding Bkm Industries Limited or generate 100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy74.53%
ValuesDaily Returns

JTL Industries  vs.  Bkm Industries Limited

 Performance 
       Timeline  
JTL Industries 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days JTL Industries 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 forward indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Bkm Industries 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Bkm Industries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Bkm Industries is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

JTL Industries and Bkm Industries Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JTL Industries and Bkm Industries

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

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