Correlation Between JGCHEMICALS and 20 Microns

Can any of the company-specific risk be diversified away by investing in both JGCHEMICALS and 20 Microns 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 JGCHEMICALS and 20 Microns into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JGCHEMICALS LIMITED and 20 Microns Limited, you can compare the effects of market volatilities on JGCHEMICALS and 20 Microns 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 JGCHEMICALS with a short position of 20 Microns. Check out your portfolio center. Please also check ongoing floating volatility patterns of JGCHEMICALS and 20 Microns.

Diversification Opportunities for JGCHEMICALS and 20 Microns

0.09

Correlation Coefficient

JGCHEMICALS  20 Microns

Significant diversification

The 3 months correlation between JGCHEMICALS and 20MICRONS is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding JGCHEMICALS LIMITED and 20 Microns Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 20 Microns Limited and JGCHEMICALS 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 JGCHEMICALS LIMITED are associated (or correlated) with 20 Microns. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 20 Microns Limited has no effect on the direction of JGCHEMICALS i.e., JGCHEMICALS and 20 Microns go up and down completely randomly.

Pair Corralation between JGCHEMICALS and 20 Microns

Assuming the 90 days trading horizon JGCHEMICALS LIMITED is expected to generate 1.9 times more return on investment than 20 Microns. However, JGCHEMICALS is 1.9 times more volatile than 20 Microns Limited. It trades about 0.05 of its potential returns per unit of risk. 20 Microns Limited is currently generating about -0.21 per unit of risk. If you would invest  40,625  in JGCHEMICALS LIMITED on September 2, 2024 and sell it today you would earn a total of  2,880  from holding JGCHEMICALS LIMITED or generate 7.09% return on investment over 90 days.

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

JGCHEMICALS LIMITED  vs.  20 Microns Limited

JGCHEMICALS LIMITED

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JGCHEMICALS LIMITED are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, JGCHEMICALS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

20 Microns Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 20 Microns Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with JGCHEMICALS and 20 Microns

The main advantage of trading using opposite JGCHEMICALS and 20 Microns positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JGCHEMICALS position performs unexpectedly, 20 Microns 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 20 Microns will offset losses from the drop in 20 Microns' long position.

The idea behind JGCHEMICALS LIMITED and 20 Microns 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.

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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.