Correlation Between JM Financial and Landmark Cars

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

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

Diversification Opportunities for JM Financial and Landmark Cars

0.4

Correlation Coefficient

JM Financial  Landmark Cars

Very weak diversification

The 3 months correlation between JMFINANCIL and Landmark is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding JM Financial Limited and Landmark Cars Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Landmark Cars Limited and JM Financial 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 JM Financial Limited are associated (or correlated) with Landmark Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Landmark Cars Limited has no effect on the direction of JM Financial i.e., JM Financial and Landmark Cars go up and down completely randomly.

Pair Corralation between JM Financial and Landmark Cars

Assuming the 90 days trading horizon JM Financial Limited is expected to generate 1.55 times more return on investment than Landmark Cars. However, JM Financial is 1.55 times more volatile than Landmark Cars Limited. It trades about 0.03 of its potential returns per unit of risk. Landmark Cars Limited is currently generating about 0.03 per unit of risk. If you would invest  12,792  in JM Financial Limited on September 23, 2024 and sell it today you would earn a total of  302.00  from holding JM Financial Limited or generate 2.36% return on investment over 90 days.

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

JM Financial Limited  vs.  Landmark Cars Limited

JM Financial Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JM Financial Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, JM Financial is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Landmark Cars Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Landmark Cars Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Landmark Cars is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with JM Financial and Landmark Cars

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

The idea behind JM Financial Limited and Landmark Cars 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.