Correlation Between JGCHEMICALS and Godawari Power

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

By analyzing existing cross correlation between JGCHEMICALS LIMITED and Godawari Power And, you can compare the effects of market volatilities on JGCHEMICALS and Godawari Power 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 Godawari Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of JGCHEMICALS and Godawari Power.

Diversification Opportunities for JGCHEMICALS and Godawari Power

0.26

Correlation Coefficient

JGCHEMICALS  Godawari Power

Modest diversification

The 3 months correlation between JGCHEMICALS and Godawari is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding JGCHEMICALS LIMITED and Godawari Power And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Godawari Power And 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 Godawari Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Godawari Power And has no effect on the direction of JGCHEMICALS i.e., JGCHEMICALS and Godawari Power go up and down completely randomly.

Pair Corralation between JGCHEMICALS and Godawari Power

Assuming the 90 days trading horizon JGCHEMICALS is expected to generate 9.69 times less return on investment than Godawari Power. In addition to that, JGCHEMICALS is 1.54 times more volatile than Godawari Power And. It trades about 0.01 of its total potential returns per unit of risk. Godawari Power And is currently generating about 0.15 per unit of volatility. If you would invest  18,821  in Godawari Power And on September 17, 2024 and sell it today you would earn a total of  4,519  from holding Godawari Power And or generate 24.01% return on investment over 90 days.

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

JGCHEMICALS LIMITED  vs.  Godawari Power And

JGCHEMICALS LIMITED

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JGCHEMICALS LIMITED has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Godawari Power And

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Godawari Power And are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Godawari Power unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JGCHEMICALS and Godawari Power

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

The idea behind JGCHEMICALS LIMITED and Godawari Power And 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.