Correlation Between Jubilant Foodworks and Kohinoor Foods

Can any of the company-specific risk be diversified away by investing in both Jubilant Foodworks and Kohinoor Foods 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 Kohinoor Foods 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 Kohinoor Foods Limited, you can compare the effects of market volatilities on Jubilant Foodworks and Kohinoor Foods 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 Kohinoor Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jubilant Foodworks and Kohinoor Foods.

Diversification Opportunities for Jubilant Foodworks and Kohinoor Foods

0.41

Correlation Coefficient

Jubilant Foodworks  Kohinoor Foods

Very weak diversification

The 3 months correlation between Jubilant and Kohinoor is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Jubilant Foodworks Limited and Kohinoor Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kohinoor Foods 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 Kohinoor Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kohinoor Foods has no effect on the direction of Jubilant Foodworks i.e., Jubilant Foodworks and Kohinoor Foods go up and down completely randomly.

Pair Corralation between Jubilant Foodworks and Kohinoor Foods

Assuming the 90 days trading horizon Jubilant Foodworks Limited is expected to generate 1.13 times more return on investment than Kohinoor Foods. However, Jubilant Foodworks is 1.13 times more volatile than Kohinoor Foods Limited. It trades about 0.3 of its potential returns per unit of risk. Kohinoor Foods Limited is currently generating about 0.18 per unit of risk. If you would invest  63,685  in Jubilant Foodworks Limited on September 13, 2024 and sell it today you would earn a total of  7,095  from holding Jubilant Foodworks Limited or generate 11.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Jubilant Foodworks Limited  vs.  Kohinoor Foods Limited

Jubilant Foodworks

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Jubilant Foodworks Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Jubilant Foodworks is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Kohinoor Foods

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kohinoor Foods Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Kohinoor Foods may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Jubilant Foodworks and Kohinoor Foods

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

The idea behind Jubilant Foodworks Limited and Kohinoor Foods 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.