Correlation Between DIAMINES AND and JGCHEMICALS

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

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

Diversification Opportunities for DIAMINES AND and JGCHEMICALS

0.69

Correlation Coefficient

DIAMINES AND  JGCHEMICALS

Poor diversification

The 3 months correlation between DIAMINES and JGCHEMICALS is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding DIAMINES AND CHEMICALS and JGCHEMICALS LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JGCHEMICALS LIMITED and DIAMINES AND 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 DIAMINES AND CHEMICALS 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 DIAMINES AND i.e., DIAMINES AND and JGCHEMICALS go up and down completely randomly.

Pair Corralation between DIAMINES AND and JGCHEMICALS

Assuming the 90 days trading horizon DIAMINES AND is expected to generate 1.58 times less return on investment than JGCHEMICALS. But when comparing it to its historical volatility, DIAMINES AND CHEMICALS is 1.06 times less risky than JGCHEMICALS. It trades about 0.15 of its potential returns per unit of risk. JGCHEMICALS LIMITED is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  33,680  in JGCHEMICALS LIMITED on April 10, 2025 and sell it today you would earn a total of  18,240  from holding JGCHEMICALS LIMITED or generate 54.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

DIAMINES AND CHEMICALS  vs.  JGCHEMICALS LIMITED

DIAMINES AND CHEMICALS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DIAMINES AND CHEMICALS are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, DIAMINES AND exhibited solid returns over the last few months and may actually be approaching a breakup point.

JGCHEMICALS LIMITED

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JGCHEMICALS LIMITED are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical indicators, JGCHEMICALS sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DIAMINES AND and JGCHEMICALS

The main advantage of trading using opposite DIAMINES AND and JGCHEMICALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DIAMINES AND 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 DIAMINES AND CHEMICALS 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.