Correlation Between Gujarat Lease and Jubilant Foodworks

Can any of the company-specific risk be diversified away by investing in both Gujarat Lease and Jubilant Foodworks 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 Gujarat Lease and Jubilant Foodworks into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gujarat Lease Financing and Jubilant Foodworks Limited, you can compare the effects of market volatilities on Gujarat Lease and Jubilant Foodworks 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 Gujarat Lease with a short position of Jubilant Foodworks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gujarat Lease and Jubilant Foodworks.

Diversification Opportunities for Gujarat Lease and Jubilant Foodworks

0.15

Correlation Coefficient

Gujarat Lease  Jubilant Foodworks

Average diversification

The 3 months correlation between Gujarat and Jubilant is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Gujarat Lease Financing and Jubilant Foodworks Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jubilant Foodworks and Gujarat Lease 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 Gujarat Lease Financing are associated (or correlated) with Jubilant Foodworks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jubilant Foodworks has no effect on the direction of Gujarat Lease i.e., Gujarat Lease and Jubilant Foodworks go up and down completely randomly.

Pair Corralation between Gujarat Lease and Jubilant Foodworks

Assuming the 90 days trading horizon Gujarat Lease Financing is expected to generate 1.26 times more return on investment than Jubilant Foodworks. However, Gujarat Lease is 1.26 times more volatile than Jubilant Foodworks Limited. It trades about 0.06 of its potential returns per unit of risk. Jubilant Foodworks Limited is currently generating about -0.02 per unit of risk. If you would invest  720.00  in Gujarat Lease Financing on September 20, 2024 and sell it today you would earn a total of  57.00  from holding Gujarat Lease Financing or generate 7.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Gujarat Lease Financing  vs.  Jubilant Foodworks Limited

Gujarat Lease Financing

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gujarat Lease Financing are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Gujarat Lease may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Jubilant Foodworks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jubilant Foodworks Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Jubilant Foodworks is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Gujarat Lease and Jubilant Foodworks

The main advantage of trading using opposite Gujarat Lease and Jubilant Foodworks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gujarat Lease position performs unexpectedly, Jubilant Foodworks 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 Jubilant Foodworks will offset losses from the drop in Jubilant Foodworks' long position.

The idea behind Gujarat Lease Financing and Jubilant Foodworks 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.