Correlation Between JGCHEMICALS and Cambridge Technology

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

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

Diversification Opportunities for JGCHEMICALS and Cambridge Technology

0.63

Correlation Coefficient

JGCHEMICALS  Cambridge Technology

Poor diversification

The 3 months correlation between JGCHEMICALS and Cambridge is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding JGCHEMICALS LIMITED and Cambridge Technology Enterpris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambridge Technology and JGCHEMICALS 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 JGCHEMICALS LIMITED are associated (or correlated) with Cambridge Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambridge Technology has no effect on the direction of JGCHEMICALS i.e., JGCHEMICALS and Cambridge Technology go up and down completely randomly.

Pair Corralation between JGCHEMICALS and Cambridge Technology

Assuming the 90 days trading horizon JGCHEMICALS is expected to generate 1.15 times less return on investment than Cambridge Technology. In addition to that, JGCHEMICALS is 1.01 times more volatile than Cambridge Technology Enterprises. It trades about 0.11 of its total potential returns per unit of risk. Cambridge Technology Enterprises is currently generating about 0.13 per unit of volatility. If you would invest  3,954  in Cambridge Technology Enterprises on April 3, 2025 and sell it today you would earn a total of  840.00  from holding Cambridge Technology Enterprises or generate 21.24% return on investment over 90 days.

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

JGCHEMICALS LIMITED  vs.  Cambridge Technology Enterpris

JGCHEMICALS LIMITED

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JGCHEMICALS LIMITED are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady technical indicators, JGCHEMICALS sustained solid returns over the last few months and may actually be approaching a breakup point.

Cambridge Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cambridge Technology Enterprises are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Cambridge Technology exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JGCHEMICALS and Cambridge Technology

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

The idea behind JGCHEMICALS LIMITED and Cambridge Technology Enterprises 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.