Correlation Between JGCHEMICALS and DCM Financial

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

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

Diversification Opportunities for JGCHEMICALS and DCM Financial

-0.02

Correlation Coefficient

JGCHEMICALS  DCM Financial

Good diversification

The 3 months correlation between JGCHEMICALS and DCM is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding JGCHEMICALS LIMITED and DCM Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DCM Financial Services 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 DCM Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DCM Financial Services has no effect on the direction of JGCHEMICALS i.e., JGCHEMICALS and DCM Financial go up and down completely randomly.

Pair Corralation between JGCHEMICALS and DCM Financial

Assuming the 90 days trading horizon JGCHEMICALS LIMITED is expected to generate 1.34 times more return on investment than DCM Financial. However, JGCHEMICALS is 1.34 times more volatile than DCM Financial Services. It trades about 0.01 of its potential returns per unit of risk. DCM Financial Services is currently generating about 0.0 per unit of risk. If you would invest  41,330  in JGCHEMICALS LIMITED on September 22, 2024 and sell it today you would lose (540.00) from holding JGCHEMICALS LIMITED or give up 1.31% of portfolio value over 90 days.

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

JGCHEMICALS LIMITED  vs.  DCM Financial Services

JGCHEMICALS LIMITED

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JGCHEMICALS LIMITED are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical indicators, JGCHEMICALS is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

DCM Financial Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DCM Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, DCM Financial is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with JGCHEMICALS and DCM Financial

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

The idea behind JGCHEMICALS LIMITED and DCM Financial Services 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.