Correlation Between Salzer Electronics and JGCHEMICALS

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

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

Diversification Opportunities for Salzer Electronics and JGCHEMICALS

0.42

Correlation Coefficient

Salzer Electronics  JGCHEMICALS

Very weak diversification

The 3 months correlation between Salzer and JGCHEMICALS is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Salzer Electronics Limited and JGCHEMICALS LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JGCHEMICALS LIMITED and Salzer Electronics 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 Salzer Electronics Limited are associated (or correlated) with JGCHEMICALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JGCHEMICALS LIMITED has no effect on the direction of Salzer Electronics i.e., Salzer Electronics and JGCHEMICALS go up and down completely randomly.

Pair Corralation between Salzer Electronics and JGCHEMICALS

Assuming the 90 days trading horizon Salzer Electronics Limited is expected to generate 0.91 times more return on investment than JGCHEMICALS. However, Salzer Electronics Limited is 1.09 times less risky than JGCHEMICALS. It trades about 0.25 of its potential returns per unit of risk. JGCHEMICALS LIMITED is currently generating about 0.01 per unit of risk. If you would invest  93,135  in Salzer Electronics Limited on September 23, 2024 and sell it today you would earn a total of  66,480  from holding Salzer Electronics Limited or generate 71.38% return on investment over 90 days.

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

Salzer Electronics Limited  vs.  JGCHEMICALS LIMITED

Salzer Electronics

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Salzer Electronics Limited are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain essential indicators, Salzer Electronics exhibited solid returns over the last few months and may actually be approaching a breakup point.

JGCHEMICALS LIMITED

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JGCHEMICALS LIMITED are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical indicators, JGCHEMICALS is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Salzer Electronics and JGCHEMICALS

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

The idea behind Salzer Electronics Limited and JGCHEMICALS 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .