Correlation Between ZF Commercial and Jubilant Foodworks

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

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

Diversification Opportunities for ZF Commercial and Jubilant Foodworks

-0.03

Correlation Coefficient

ZF Commercial  Jubilant Foodworks

Good diversification

The 3 months correlation between ZFCVINDIA and Jubilant is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding ZF Commercial Vehicle and Jubilant Foodworks Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jubilant Foodworks and ZF Commercial 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 ZF Commercial Vehicle are associated (or correlated) with Jubilant Foodworks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jubilant Foodworks has no effect on the direction of ZF Commercial i.e., ZF Commercial and Jubilant Foodworks go up and down completely randomly.

Pair Corralation between ZF Commercial and Jubilant Foodworks

Assuming the 90 days trading horizon ZF Commercial Vehicle is expected to under-perform the Jubilant Foodworks. In addition to that, ZF Commercial is 1.06 times more volatile than Jubilant Foodworks Limited. It trades about -0.1 of its total potential returns per unit of risk. Jubilant Foodworks Limited is currently generating about 0.1 per unit of volatility. If you would invest  55,081  in Jubilant Foodworks Limited on September 19, 2024 and sell it today you would earn a total of  13,209  from holding Jubilant Foodworks Limited or generate 23.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.19%
Values	Daily Returns

ZF Commercial Vehicle  vs.  Jubilant Foodworks Limited

ZF Commercial Vehicle

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZF Commercial Vehicle has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Jubilant Foodworks

Risk-Adjusted Performance

0 of 100

Very Weak

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 newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ZF Commercial and Jubilant Foodworks

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

The idea behind ZF Commercial Vehicle and Jubilant Foodworks 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.