Correlation Between Infomedia Press and JB Chemicals

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

By analyzing existing cross correlation between Infomedia Press Limited and JB Chemicals Pharmaceuticals, you can compare the effects of market volatilities on Infomedia Press and JB Chemicals 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 Infomedia Press with a short position of JB Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infomedia Press and JB Chemicals.

Diversification Opportunities for Infomedia Press and JB Chemicals

0.42

Correlation Coefficient

Infomedia Press  JB Chemicals

Very weak diversification

The 3 months correlation between Infomedia and JBCHEPHARM is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Infomedia Press Limited and JB Chemicals Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JB Chemicals Pharmac and Infomedia Press 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 Infomedia Press Limited are associated (or correlated) with JB Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JB Chemicals Pharmac has no effect on the direction of Infomedia Press i.e., Infomedia Press and JB Chemicals go up and down completely randomly.

Pair Corralation between Infomedia Press and JB Chemicals

Assuming the 90 days trading horizon Infomedia Press Limited is expected to generate 1.79 times more return on investment than JB Chemicals. However, Infomedia Press is 1.79 times more volatile than JB Chemicals Pharmaceuticals. It trades about 0.1 of its potential returns per unit of risk. JB Chemicals Pharmaceuticals is currently generating about -0.01 per unit of risk. If you would invest  650.00  in Infomedia Press Limited on September 20, 2024 and sell it today you would earn a total of  120.00  from holding Infomedia Press Limited or generate 18.46% return on investment over 90 days.

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

Infomedia Press Limited  vs.  JB Chemicals Pharmaceuticals

Infomedia Press

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Infomedia Press Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Infomedia Press exhibited solid returns over the last few months and may actually be approaching a breakup point.

JB Chemicals Pharmac

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JB Chemicals Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, JB Chemicals is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Infomedia Press and JB Chemicals

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

The idea behind Infomedia Press Limited and JB Chemicals Pharmaceuticals 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.