Correlation Between Jubilant Foodworks and Hisar Metal

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

By analyzing existing cross correlation between Jubilant Foodworks Limited and Hisar Metal Industries, you can compare the effects of market volatilities on Jubilant Foodworks and Hisar Metal 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 Jubilant Foodworks with a short position of Hisar Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jubilant Foodworks and Hisar Metal.

Diversification Opportunities for Jubilant Foodworks and Hisar Metal

0.47

Correlation Coefficient

Jubilant Foodworks  Hisar Metal

Very weak diversification

The 3 months correlation between Jubilant and Hisar is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Jubilant Foodworks Limited and Hisar Metal Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hisar Metal Industries and Jubilant Foodworks 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 Jubilant Foodworks Limited are associated (or correlated) with Hisar Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hisar Metal Industries has no effect on the direction of Jubilant Foodworks i.e., Jubilant Foodworks and Hisar Metal go up and down completely randomly.

Pair Corralation between Jubilant Foodworks and Hisar Metal

Assuming the 90 days trading horizon Jubilant Foodworks is expected to generate 3.25 times less return on investment than Hisar Metal. But when comparing it to its historical volatility, Jubilant Foodworks Limited is 1.85 times less risky than Hisar Metal. It trades about 0.22 of its potential returns per unit of risk. Hisar Metal Industries is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest  16,684  in Hisar Metal Industries on September 27, 2024 and sell it today you would earn a total of  5,269  from holding Hisar Metal Industries or generate 31.58% return on investment over 90 days.

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

Jubilant Foodworks Limited  vs.  Hisar Metal Industries

Jubilant Foodworks

Risk-Adjusted Performance

2 of 100

Weak

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

Hisar Metal Industries

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hisar Metal Industries are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Hisar Metal may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Jubilant Foodworks and Hisar Metal

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

The idea behind Jubilant Foodworks Limited and Hisar Metal Industries 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.