Correlation Between GLG LIFE and JLF INVESTMENT
Can any of the company-specific risk be diversified away by investing in both GLG LIFE and JLF INVESTMENT 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 GLG LIFE and JLF INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GLG LIFE TECH and JLF INVESTMENT, you can compare the effects of market volatilities on GLG LIFE and JLF INVESTMENT 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 GLG LIFE with a short position of JLF INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of GLG LIFE and JLF INVESTMENT.
Diversification Opportunities for GLG LIFE and JLF INVESTMENT
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between GLG and JLF is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding GLG LIFE TECH and JLF INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JLF INVESTMENT and GLG LIFE 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 GLG LIFE TECH are associated (or correlated) with JLF INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JLF INVESTMENT has no effect on the direction of GLG LIFE i.e., GLG LIFE and JLF INVESTMENT go up and down completely randomly.
Pair Corralation between GLG LIFE and JLF INVESTMENT
Assuming the 90 days trading horizon GLG LIFE TECH is expected to generate 22.09 times more return on investment than JLF INVESTMENT. However, GLG LIFE is 22.09 times more volatile than JLF INVESTMENT. It trades about 0.06 of its potential returns per unit of risk. JLF INVESTMENT is currently generating about -0.04 per unit of risk. If you would invest 1.75 in GLG LIFE TECH on October 27, 2024 and sell it today you would earn a total of 0.25 from holding GLG LIFE TECH or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GLG LIFE TECH vs. JLF INVESTMENT
Performance |
| Timeline |
| GLG LIFE TECH |
| JLF INVESTMENT |
GLG LIFE and JLF INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GLG LIFE and JLF INVESTMENT
The main advantage of trading using opposite GLG LIFE and JLF INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GLG LIFE position performs unexpectedly, JLF INVESTMENT 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 JLF INVESTMENT will offset losses from the drop in JLF INVESTMENT's long position.| GLG LIFE vs. ITALIAN WINE BRANDS | GLG LIFE vs. DFS Furniture PLC | GLG LIFE vs. Hisense Home Appliances | GLG LIFE vs. Addus HomeCare |
| JLF INVESTMENT vs. Zijin Mining Group | JLF INVESTMENT vs. Firan Technology Group | JLF INVESTMENT vs. Playtech plc | JLF INVESTMENT vs. Ringmetall SE |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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