Correlation Between JTL Industries and Malu Paper

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

Diversification Opportunities for JTL Industries and Malu Paper

0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between JTL and Malu is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding JTL Industries and Malu Paper Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malu Paper Mills 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 Malu Paper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malu Paper Mills has no effect on the direction of JTL Industries i.e., JTL Industries and Malu Paper go up and down completely randomly.

Pair Corralation between JTL Industries and Malu Paper

Assuming the 90 days trading horizon JTL Industries is expected to under-perform the Malu Paper. In addition to that, JTL Industries is 6.21 times more volatile than Malu Paper Mills. It trades about -0.2 of its total potential returns per unit of risk. Malu Paper Mills is currently generating about -0.06 per unit of volatility. If you would invest  4,625  in Malu Paper Mills on September 2, 2024 and sell it today you would lose (117.00) from holding Malu Paper Mills or give up 2.53% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

JTL Industries  vs.  Malu Paper Mills

 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 unfluctuating 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.
Malu Paper Mills 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Malu Paper Mills has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Malu Paper is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

JTL Industries and Malu Paper Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JTL Industries and Malu Paper

The main advantage of trading using opposite JTL Industries and Malu Paper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JTL Industries position performs unexpectedly, Malu Paper 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 Malu Paper will offset losses from the drop in Malu Paper's long position.
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The idea behind JTL Industries and Malu Paper Mills 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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