Correlation Between JGCHEMICALS and V Mart

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

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

Diversification Opportunities for JGCHEMICALS and V Mart

-0.48

Correlation Coefficient

JGCHEMICALS  V Mart

Very good diversification

The 3 months correlation between JGCHEMICALS and VMART is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding JGCHEMICALS LIMITED and V Mart Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on V Mart Retail 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 V Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of V Mart Retail has no effect on the direction of JGCHEMICALS i.e., JGCHEMICALS and V Mart go up and down completely randomly.

Pair Corralation between JGCHEMICALS and V Mart

Assuming the 90 days trading horizon JGCHEMICALS is expected to generate 1.99 times less return on investment than V Mart. In addition to that, JGCHEMICALS is 1.31 times more volatile than V Mart Retail Limited. It trades about 0.03 of its total potential returns per unit of risk. V Mart Retail Limited is currently generating about 0.08 per unit of volatility. If you would invest  359,455  in V Mart Retail Limited on September 5, 2024 and sell it today you would earn a total of  45,980  from holding V Mart Retail Limited or generate 12.79% return on investment over 90 days.

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

JGCHEMICALS LIMITED  vs.  V Mart Retail Limited

JGCHEMICALS LIMITED

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JGCHEMICALS LIMITED are ranked lower than 2 (%) 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.

V Mart Retail

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in V Mart Retail Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, V Mart displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JGCHEMICALS and V Mart

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

The idea behind JGCHEMICALS LIMITED and V Mart Retail 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.