Correlation Between Jayant Agro and Amrutanjan Health

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

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

Diversification Opportunities for Jayant Agro and Amrutanjan Health

0.65

Correlation Coefficient

Jayant Agro  Amrutanjan Health

Poor diversification

The 3 months correlation between Jayant and Amrutanjan is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Jayant Agro Organics and Amrutanjan Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amrutanjan Health Care and Jayant Agro 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 Jayant Agro Organics are associated (or correlated) with Amrutanjan Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amrutanjan Health Care has no effect on the direction of Jayant Agro i.e., Jayant Agro and Amrutanjan Health go up and down completely randomly.

Pair Corralation between Jayant Agro and Amrutanjan Health

Assuming the 90 days trading horizon Jayant Agro Organics is expected to under-perform the Amrutanjan Health. But the stock apears to be less risky and, when comparing its historical volatility, Jayant Agro Organics is 1.05 times less risky than Amrutanjan Health. The stock trades about -0.03 of its potential returns per unit of risk. The Amrutanjan Health Care is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  77,815  in Amrutanjan Health Care on September 17, 2024 and sell it today you would lose (2,760) from holding Amrutanjan Health Care or give up 3.55% of portfolio value over 90 days.

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

Jayant Agro Organics  vs.  Amrutanjan Health Care

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.

Amrutanjan Health Care

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Jayant Agro and Amrutanjan Health

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

The idea behind Jayant Agro Organics and Amrutanjan Health Care 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.