Correlation Between Hilton Metal and Jayant Agro

Can any of the company-specific risk be diversified away by investing in both Hilton Metal and Jayant Agro 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 Hilton Metal and Jayant Agro into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hilton Metal Forging and Jayant Agro Organics, you can compare the effects of market volatilities on Hilton Metal and Jayant Agro 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 Hilton Metal with a short position of Jayant Agro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Metal and Jayant Agro.

Diversification Opportunities for Hilton Metal and Jayant Agro

0.25

Correlation Coefficient

Hilton Metal  Jayant Agro

Modest diversification

The 3 months correlation between Hilton and Jayant is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Metal Forging and Jayant Agro Organics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jayant Agro Organics and Hilton Metal 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 Hilton Metal Forging are associated (or correlated) with Jayant Agro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jayant Agro Organics has no effect on the direction of Hilton Metal i.e., Hilton Metal and Jayant Agro go up and down completely randomly.

Pair Corralation between Hilton Metal and Jayant Agro

Assuming the 90 days trading horizon Hilton Metal is expected to generate 1.03 times less return on investment than Jayant Agro. In addition to that, Hilton Metal is 1.22 times more volatile than Jayant Agro Organics. It trades about 0.04 of its total potential returns per unit of risk. Jayant Agro Organics is currently generating about 0.05 per unit of volatility. If you would invest  17,379  in Jayant Agro Organics on September 21, 2024 and sell it today you would earn a total of  11,426  from holding Jayant Agro Organics or generate 65.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.59%
Values	Daily Returns

Hilton Metal Forging  vs.  Jayant Agro Organics

Hilton Metal Forging

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hilton Metal Forging are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Hilton Metal sustained solid returns over the last few months and may actually be approaching a breakup point.

Jayant Agro Organics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Hilton Metal and Jayant Agro

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

The idea behind Hilton Metal Forging and Jayant Agro Organics 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.