Correlation Between JTL Industries and Hisar Metal

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

Diversification Opportunities for JTL Industries and Hisar Metal

0.84
  Correlation Coefficient

Very poor diversification

The 3 months correlation between JTL and Hisar is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding JTL Industries and Hisar Metal Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hisar Metal 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 Hisar Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hisar Metal Industries has no effect on the direction of JTL Industries i.e., JTL Industries and Hisar Metal go up and down completely randomly.

Pair Corralation between JTL Industries and Hisar Metal

Assuming the 90 days trading horizon JTL Industries is expected to under-perform the Hisar Metal. In addition to that, JTL Industries is 1.54 times more volatile than Hisar Metal Industries. It trades about -0.04 of its total potential returns per unit of risk. Hisar Metal Industries is currently generating about -0.01 per unit of volatility. If you would invest  19,904  in Hisar Metal Industries on August 29, 2024 and sell it today you would lose (3,220) from holding Hisar Metal Industries or give up 16.18% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

JTL Industries  vs.  Hisar Metal Industries

 Performance 
       Timeline  
JTL Industries 

Risk-Adjusted Performance

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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 unsteady performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
Hisar Metal Industries 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Hisar Metal Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

JTL Industries and Hisar Metal Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JTL Industries and Hisar Metal

The main advantage of trading using opposite JTL Industries and Hisar Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JTL Industries position performs unexpectedly, Hisar Metal 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 Hisar Metal will offset losses from the drop in Hisar Metal's long position.
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The idea behind JTL Industries and Hisar Metal Industries 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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