Correlation Between Hybrid Financial and JM Financial

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

By analyzing existing cross correlation between Hybrid Financial Services and JM Financial Limited, you can compare the effects of market volatilities on Hybrid Financial and JM Financial 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 Hybrid Financial with a short position of JM Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hybrid Financial and JM Financial.

Diversification Opportunities for Hybrid Financial and JM Financial

-0.2

Correlation Coefficient

Hybrid Financial  JM Financial

Good diversification

The 3 months correlation between Hybrid and JMFINANCIL is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Hybrid Financial Services and JM Financial Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JM Financial Limited and Hybrid Financial 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 Hybrid Financial Services are associated (or correlated) with JM Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JM Financial Limited has no effect on the direction of Hybrid Financial i.e., Hybrid Financial and JM Financial go up and down completely randomly.

Pair Corralation between Hybrid Financial and JM Financial

Assuming the 90 days trading horizon Hybrid Financial Services is expected to generate 0.85 times more return on investment than JM Financial. However, Hybrid Financial Services is 1.17 times less risky than JM Financial. It trades about 0.1 of its potential returns per unit of risk. JM Financial Limited is currently generating about 0.05 per unit of risk. If you would invest  1,321  in Hybrid Financial Services on September 20, 2024 and sell it today you would earn a total of  213.00  from holding Hybrid Financial Services or generate 16.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Hybrid Financial Services  vs.  JM Financial Limited

Hybrid Financial Services

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hybrid Financial Services are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Hybrid Financial reported solid returns over the last few months and may actually be approaching a breakup point.

JM Financial Limited

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Hybrid Financial and JM Financial

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

The idea behind Hybrid Financial Services and JM Financial 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.