Correlation Between J Long and Shoe Carnival

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Can any of the company-specific risk be diversified away by investing in both J Long and Shoe Carnival 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 J Long and Shoe Carnival into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between J Long Group Limited and Shoe Carnival, you can compare the effects of market volatilities on J Long and Shoe Carnival 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 J Long with a short position of Shoe Carnival. Check out your portfolio center. Please also check ongoing floating volatility patterns of J Long and Shoe Carnival.

Diversification Opportunities for J Long and Shoe Carnival

J LongShoeDiversified AwayJ LongShoeDiversified Away100%
-0.67
  Correlation Coefficient

Excellent diversification

The 3 months correlation between J Long and Shoe is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding J Long Group Limited and Shoe Carnival in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoe Carnival and J Long 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 J Long Group Limited are associated (or correlated) with Shoe Carnival. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shoe Carnival has no effect on the direction of J Long i.e., J Long and Shoe Carnival go up and down completely randomly.

Pair Corralation between J Long and Shoe Carnival

Allowing for the 90-day total investment horizon J Long Group Limited is expected to generate 3.7 times more return on investment than Shoe Carnival. However, J Long is 3.7 times more volatile than Shoe Carnival. It trades about 0.13 of its potential returns per unit of risk. Shoe Carnival is currently generating about -0.26 per unit of risk. If you would invest  305.00  in J Long Group Limited on November 26, 2024 and sell it today you would earn a total of  186.00  from holding J Long Group Limited or generate 60.98% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

J Long Group Limited  vs.  Shoe Carnival

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -40-200204060
JavaScript chart by amCharts 3.21.15JL SCVL
       Timeline  
J Long Group 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in J Long Group Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, J Long disclosed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb468101214
Shoe Carnival 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Shoe Carnival has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2224262830323436

J Long and Shoe Carnival Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-30.7-23.0-15.29-7.580.07.915.9423.9732.01 0.010.020.030.040.050.06
JavaScript chart by amCharts 3.21.15JL SCVL
       Returns  

Pair Trading with J Long and Shoe Carnival

The main advantage of trading using opposite J Long and Shoe Carnival positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J Long position performs unexpectedly, Shoe Carnival 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 Shoe Carnival will offset losses from the drop in Shoe Carnival's long position.
The idea behind J Long Group Limited and Shoe Carnival 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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