Correlation Between Jai Balaji and Meghmani Organics

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

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

Diversification Opportunities for Jai Balaji and Meghmani Organics

0.0

Correlation Coefficient

Jai Balaji  Meghmani Organics

Pay attention - limited upside

The 3 months correlation between Jai and Meghmani is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Jai Balaji Industries and Meghmani Organics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meghmani Organics and Jai Balaji 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 Jai Balaji Industries are associated (or correlated) with Meghmani Organics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meghmani Organics has no effect on the direction of Jai Balaji i.e., Jai Balaji and Meghmani Organics go up and down completely randomly.

Pair Corralation between Jai Balaji and Meghmani Organics

If you would invest  8,832  in Meghmani Organics Limited on April 4, 2025 and sell it today you would earn a total of  1,263  from holding Meghmani Organics Limited or generate 14.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	4.35%
Values	Daily Returns

Jai Balaji Industries  vs.  Meghmani Organics Limited

Jai Balaji Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jai Balaji Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Jai Balaji is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Meghmani Organics

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Meghmani Organics Limited are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Meghmani Organics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jai Balaji and Meghmani Organics

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

The idea behind Jai Balaji Industries and Meghmani Organics 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.