Correlation Between JTL Industries and Hindustan Zinc

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

Diversification Opportunities for JTL Industries and Hindustan Zinc

0.25
  Correlation Coefficient

Modest diversification

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

Pair Corralation between JTL Industries and Hindustan Zinc

Assuming the 90 days trading horizon JTL Industries is expected to under-perform the Hindustan Zinc. In addition to that, JTL Industries is 1.38 times more volatile than Hindustan Zinc Limited. It trades about 0.0 of its total potential returns per unit of risk. Hindustan Zinc Limited is currently generating about 0.07 per unit of volatility. If you would invest  25,825  in Hindustan Zinc Limited on September 12, 2024 and sell it today you would earn a total of  24,020  from holding Hindustan Zinc Limited or generate 93.01% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy99.18%
ValuesDaily Returns

JTL Industries  vs.  Hindustan Zinc Limited

 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.
Hindustan Zinc 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Hindustan Zinc Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Hindustan Zinc is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

JTL Industries and Hindustan Zinc Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JTL Industries and Hindustan Zinc

The main advantage of trading using opposite JTL Industries and Hindustan Zinc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JTL Industries position performs unexpectedly, Hindustan Zinc 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 Hindustan Zinc will offset losses from the drop in Hindustan Zinc's long position.
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The idea behind JTL Industries and Hindustan Zinc 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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