Correlation Between Fineotex Chemical and JGCHEMICALS

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

Diversification Opportunities for Fineotex Chemical and JGCHEMICALS

-0.14
  Correlation Coefficient

Good diversification

The 3 months correlation between Fineotex and JGCHEMICALS is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Fineotex Chemical Limited and JGCHEMICALS LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JGCHEMICALS LIMITED and Fineotex Chemical 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 Fineotex Chemical Limited are associated (or correlated) with JGCHEMICALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JGCHEMICALS LIMITED has no effect on the direction of Fineotex Chemical i.e., Fineotex Chemical and JGCHEMICALS go up and down completely randomly.

Pair Corralation between Fineotex Chemical and JGCHEMICALS

Assuming the 90 days trading horizon Fineotex Chemical Limited is expected to under-perform the JGCHEMICALS. But the stock apears to be less risky and, when comparing its historical volatility, Fineotex Chemical Limited is 1.98 times less risky than JGCHEMICALS. The stock trades about -0.06 of its potential returns per unit of risk. The JGCHEMICALS LIMITED is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  36,635  in JGCHEMICALS LIMITED on September 5, 2024 and sell it today you would earn a total of  6,580  from holding JGCHEMICALS LIMITED or generate 17.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Fineotex Chemical Limited  vs.  JGCHEMICALS LIMITED

 Performance 
       Timeline  
Fineotex Chemical 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Fineotex Chemical Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Fineotex Chemical is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.
JGCHEMICALS LIMITED 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in JGCHEMICALS LIMITED are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, JGCHEMICALS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fineotex Chemical and JGCHEMICALS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fineotex Chemical and JGCHEMICALS

The main advantage of trading using opposite Fineotex Chemical and JGCHEMICALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fineotex Chemical position performs unexpectedly, JGCHEMICALS 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 JGCHEMICALS will offset losses from the drop in JGCHEMICALS's long position.
The idea behind Fineotex Chemical Limited and JGCHEMICALS 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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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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