Correlation Between JLEN Environmental and Aeorema Communications
Can any of the company-specific risk be diversified away by investing in both JLEN Environmental and Aeorema Communications 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 JLEN Environmental and Aeorema Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JLEN Environmental Assets and Aeorema Communications Plc, you can compare the effects of market volatilities on JLEN Environmental and Aeorema Communications 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 JLEN Environmental with a short position of Aeorema Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of JLEN Environmental and Aeorema Communications.
Diversification Opportunities for JLEN Environmental and Aeorema Communications
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JLEN and Aeorema is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding JLEN Environmental Assets and Aeorema Communications Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeorema Communications and JLEN Environmental 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 JLEN Environmental Assets are associated (or correlated) with Aeorema Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeorema Communications has no effect on the direction of JLEN Environmental i.e., JLEN Environmental and Aeorema Communications go up and down completely randomly.
Pair Corralation between JLEN Environmental and Aeorema Communications
Assuming the 90 days trading horizon JLEN Environmental Assets is expected to under-perform the Aeorema Communications. But the stock apears to be less risky and, when comparing its historical volatility, JLEN Environmental Assets is 1.84 times less risky than Aeorema Communications. The stock trades about -0.05 of its potential returns per unit of risk. The Aeorema Communications Plc is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 7,193 in Aeorema Communications Plc on August 27, 2024 and sell it today you would lose (1,743) from holding Aeorema Communications Plc or give up 24.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JLEN Environmental Assets vs. Aeorema Communications Plc
Performance |
| Timeline |
| JLEN Environmental Assets |
| Aeorema Communications |
JLEN Environmental and Aeorema Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JLEN Environmental and Aeorema Communications
The main advantage of trading using opposite JLEN Environmental and Aeorema Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JLEN Environmental position performs unexpectedly, Aeorema Communications 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 Aeorema Communications will offset losses from the drop in Aeorema Communications' long position.| JLEN Environmental vs. Samsung Electronics Co | JLEN Environmental vs. Samsung Electronics Co | JLEN Environmental vs. Hyundai Motor | JLEN Environmental vs. Toyota Motor Corp |
| Aeorema Communications vs. Samsung Electronics Co | Aeorema Communications vs. Samsung Electronics Co | Aeorema Communications vs. Hyundai Motor | Aeorema Communications vs. Toyota Motor Corp |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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