Correlation Between JTL Industries and Pondy Oxides

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

Diversification Opportunities for JTL Industries and Pondy Oxides

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between JTL and Pondy is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding JTL Industries and Pondy Oxides Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pondy Oxides 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 Pondy Oxides. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pondy Oxides Chemicals has no effect on the direction of JTL Industries i.e., JTL Industries and Pondy Oxides go up and down completely randomly.

Pair Corralation between JTL Industries and Pondy Oxides

Assuming the 90 days trading horizon JTL Industries is expected to under-perform the Pondy Oxides. In addition to that, JTL Industries is 4.58 times more volatile than Pondy Oxides Chemicals. It trades about -0.2 of its total potential returns per unit of risk. Pondy Oxides Chemicals is currently generating about -0.2 per unit of volatility. If you would invest  97,980  in Pondy Oxides Chemicals on September 2, 2024 and sell it today you would lose (10,285) from holding Pondy Oxides Chemicals or give up 10.5% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

JTL Industries  vs.  Pondy Oxides Chemicals

 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.
Pondy Oxides Chemicals 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Pondy Oxides Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Pondy Oxides 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 Pondy Oxides Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JTL Industries and Pondy Oxides

The main advantage of trading using opposite JTL Industries and Pondy Oxides positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JTL Industries position performs unexpectedly, Pondy Oxides 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 Pondy Oxides will offset losses from the drop in Pondy Oxides' long position.
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The idea behind JTL Industries and Pondy Oxides 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 Global Correlations module to find global opportunities by holding instruments from different markets.

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