Correlation Between JGCHEMICALS and Reliance Communications

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

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

Diversification Opportunities for JGCHEMICALS and Reliance Communications

-0.35

Correlation Coefficient

JGCHEMICALS  Reliance Communications

Very good diversification

The 3 months correlation between JGCHEMICALS and Reliance is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding JGCHEMICALS LIMITED and Reliance Communications Limite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliance Communications 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 Reliance Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliance Communications has no effect on the direction of JGCHEMICALS i.e., JGCHEMICALS and Reliance Communications go up and down completely randomly.

Pair Corralation between JGCHEMICALS and Reliance Communications

Assuming the 90 days trading horizon JGCHEMICALS LIMITED is expected to generate 1.46 times more return on investment than Reliance Communications. However, JGCHEMICALS is 1.46 times more volatile than Reliance Communications Limited. It trades about 0.16 of its potential returns per unit of risk. Reliance Communications Limited is currently generating about 0.04 per unit of risk. If you would invest  20,670  in JGCHEMICALS LIMITED on September 3, 2024 and sell it today you would earn a total of  22,835  from holding JGCHEMICALS LIMITED or generate 110.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.19%
Values	Daily Returns

JGCHEMICALS LIMITED  vs.  Reliance Communications Limite

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 sustained solid returns over the last few months and may actually be approaching a breakup point.

Reliance Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Reliance Communications Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with JGCHEMICALS and Reliance Communications

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

The idea behind JGCHEMICALS LIMITED and Reliance Communications 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.