Correlation Between Hindustan Copper and Jayant Agro

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

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

Diversification Opportunities for Hindustan Copper and Jayant Agro

0.71

Correlation Coefficient

Hindustan Copper  Jayant Agro

Poor diversification

The 3 months correlation between Hindustan and Jayant is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Hindustan Copper Limited 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 Hindustan Copper 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 Hindustan Copper Limited 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 Hindustan Copper i.e., Hindustan Copper and Jayant Agro go up and down completely randomly.

Pair Corralation between Hindustan Copper and Jayant Agro

Assuming the 90 days trading horizon Hindustan Copper Limited is expected to under-perform the Jayant Agro. In addition to that, Hindustan Copper is 1.16 times more volatile than Jayant Agro Organics. It trades about -0.11 of its total potential returns per unit of risk. Jayant Agro Organics is currently generating about -0.03 per unit of volatility. If you would invest  30,315  in Jayant Agro Organics on September 21, 2024 and sell it today you would lose (1,510) from holding Jayant Agro Organics or give up 4.98% of portfolio value over 90 days.

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

Hindustan Copper Limited  vs.  Jayant Agro Organics

Hindustan Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hindustan Copper Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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 Hindustan Copper and Jayant Agro

The main advantage of trading using opposite Hindustan Copper and Jayant Agro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hindustan Copper 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 Hindustan Copper Limited 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.