Correlation Between Parag Milk and Jayant Agro

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

By analyzing existing cross correlation between Parag Milk Foods and Jayant Agro Organics, you can compare the effects of market volatilities on Parag Milk and Jayant Agro 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 Parag Milk with a short position of Jayant Agro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parag Milk and Jayant Agro.

Diversification Opportunities for Parag Milk and Jayant Agro

0.72

Correlation Coefficient

Parag Milk  Jayant Agro

Poor diversification

The 3 months correlation between Parag and Jayant is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Parag Milk Foods and Jayant Agro Organics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jayant Agro Organics and Parag Milk 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 Parag Milk Foods are associated (or correlated) with Jayant Agro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jayant Agro Organics has no effect on the direction of Parag Milk i.e., Parag Milk and Jayant Agro go up and down completely randomly.

Pair Corralation between Parag Milk and Jayant Agro

Assuming the 90 days trading horizon Parag Milk Foods is expected to generate 1.46 times more return on investment than Jayant Agro. However, Parag Milk is 1.46 times more volatile than Jayant Agro Organics. It trades about 0.18 of its potential returns per unit of risk. Jayant Agro Organics is currently generating about 0.1 per unit of risk. If you would invest  18,430  in Parag Milk Foods on April 25, 2025 and sell it today you would earn a total of  6,929  from holding Parag Milk Foods or generate 37.6% return on investment over 90 days.

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

Parag Milk Foods  vs.  Jayant Agro Organics

Parag Milk Foods

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Parag Milk Foods are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, Parag Milk demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Jayant Agro Organics

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jayant Agro Organics are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Jayant Agro displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Parag Milk and Jayant Agro

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

The idea behind Parag Milk Foods and Jayant Agro Organics 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.