Correlation Between JTL Industries and PCBL

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

Diversification Opportunities for JTL Industries and PCBL

0.74
  Correlation Coefficient

Poor diversification

The 3 months correlation between JTL and PCBL is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding JTL Industries and PCBL LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCBL LIMITED 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 PCBL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PCBL LIMITED has no effect on the direction of JTL Industries i.e., JTL Industries and PCBL go up and down completely randomly.

Pair Corralation between JTL Industries and PCBL

Assuming the 90 days trading horizon JTL Industries is expected to under-perform the PCBL. In addition to that, JTL Industries is 4.71 times more volatile than PCBL LIMITED. It trades about -0.2 of its total potential returns per unit of risk. PCBL LIMITED is currently generating about -0.26 per unit of volatility. If you would invest  44,750  in PCBL LIMITED on August 27, 2024 and sell it today you would lose (5,410) from holding PCBL LIMITED or give up 12.09% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.0%
ValuesDaily Returns

JTL Industries  vs.  PCBL LIMITED

 Performance 
       Timeline  
JTL Industries 

Risk-Adjusted Performance

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Over the last 90 days JTL Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak 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.
PCBL LIMITED 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days PCBL LIMITED has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

JTL Industries and PCBL Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JTL Industries and PCBL

The main advantage of trading using opposite JTL Industries and PCBL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JTL Industries position performs unexpectedly, PCBL 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 PCBL will offset losses from the drop in PCBL's long position.
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The idea behind JTL Industries and PCBL 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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