Correlation Between JTL Industries and Fertilizers

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

Diversification Opportunities for JTL Industries and Fertilizers

0.25
  Correlation Coefficient

Modest diversification

The 3 months correlation between JTL and Fertilizers is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding JTL Industries and Fertilizers and Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fertilizers and Chemicals 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 Fertilizers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fertilizers and Chemicals has no effect on the direction of JTL Industries i.e., JTL Industries and Fertilizers go up and down completely randomly.

Pair Corralation between JTL Industries and Fertilizers

Assuming the 90 days trading horizon JTL Industries is expected to under-perform the Fertilizers. But the stock apears to be less risky and, when comparing its historical volatility, JTL Industries is 1.12 times less risky than Fertilizers. The stock trades about 0.0 of its potential returns per unit of risk. The Fertilizers and Chemicals is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  26,687  in Fertilizers and Chemicals on September 12, 2024 and sell it today you would earn a total of  75,648  from holding Fertilizers and Chemicals or generate 283.46% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy99.18%
ValuesDaily Returns

JTL Industries  vs.  Fertilizers and Chemicals

 Performance 
       Timeline  
JTL Industries 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Fertilizers and Chemicals 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Fertilizers and Chemicals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fertilizers is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

JTL Industries and Fertilizers Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JTL Industries and Fertilizers

The main advantage of trading using opposite JTL Industries and Fertilizers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JTL Industries position performs unexpectedly, Fertilizers 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 Fertilizers will offset losses from the drop in Fertilizers' long position.
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The idea behind JTL Industries and Fertilizers and 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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