Correlation Between Edita Food and JLEN Environmental
Can any of the company-specific risk be diversified away by investing in both Edita Food and JLEN Environmental 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 Edita Food and JLEN Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edita Food Industries and JLEN Environmental Assets, you can compare the effects of market volatilities on Edita Food and JLEN Environmental 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 Edita Food with a short position of JLEN Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edita Food and JLEN Environmental.
Diversification Opportunities for Edita Food and JLEN Environmental
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Edita and JLEN is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Edita Food Industries and JLEN Environmental Assets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JLEN Environmental Assets and Edita Food 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 Edita Food Industries are associated (or correlated) with JLEN Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JLEN Environmental Assets has no effect on the direction of Edita Food i.e., Edita Food and JLEN Environmental go up and down completely randomly.
Pair Corralation between Edita Food and JLEN Environmental
Assuming the 90 days trading horizon Edita Food Industries is expected to generate 0.4 times more return on investment than JLEN Environmental. However, Edita Food Industries is 2.48 times less risky than JLEN Environmental. It trades about 0.21 of its potential returns per unit of risk. JLEN Environmental Assets is currently generating about -0.04 per unit of risk. If you would invest 195.00 in Edita Food Industries on September 14, 2024 and sell it today you would earn a total of 5.00 from holding Edita Food Industries or generate 2.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 72.73% |
| Values | Daily Returns |
Edita Food Industries vs. JLEN Environmental Assets
Performance |
| Timeline |
| Edita Food Industries |
| JLEN Environmental Assets |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Edita Food and JLEN Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edita Food and JLEN Environmental
The main advantage of trading using opposite Edita Food and JLEN Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edita Food position performs unexpectedly, JLEN Environmental 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 JLEN Environmental will offset losses from the drop in JLEN Environmental's long position.| Edita Food vs. Walmart | Edita Food vs. BYD Co | Edita Food vs. Volkswagen AG Non Vtg | Edita Food vs. Compass Group PLC |
| JLEN Environmental vs. Ebro Foods | JLEN Environmental vs. Edita Food Industries | JLEN Environmental vs. Premier Foods PLC | JLEN Environmental vs. Public Storage |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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