Correlation Between JLEN Environmental and JD Sports
Can any of the company-specific risk be diversified away by investing in both JLEN Environmental and JD Sports 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 JD Sports 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 JD Sports Fashion, you can compare the effects of market volatilities on JLEN Environmental and JD Sports 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 JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of JLEN Environmental and JD Sports.
Diversification Opportunities for JLEN Environmental and JD Sports
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between JLEN and JD Sports is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding JLEN Environmental Assets and JD Sports Fashion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Sports Fashion 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 JD Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Sports Fashion has no effect on the direction of JLEN Environmental i.e., JLEN Environmental and JD Sports go up and down completely randomly.
Pair Corralation between JLEN Environmental and JD Sports
Assuming the 90 days trading horizon JLEN Environmental Assets is expected to generate 0.47 times more return on investment than JD Sports. However, JLEN Environmental Assets is 2.13 times less risky than JD Sports. It trades about -0.3 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.19 per unit of risk. If you would invest 8,630 in JLEN Environmental Assets on September 1, 2024 and sell it today you would lose (1,100) from holding JLEN Environmental Assets or give up 12.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
JLEN Environmental Assets vs. JD Sports Fashion
Performance |
| Timeline |
| JLEN Environmental Assets |
| JD Sports Fashion |
JLEN Environmental and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JLEN Environmental and JD Sports
The main advantage of trading using opposite JLEN Environmental and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JLEN Environmental position performs unexpectedly, JD Sports 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 JD Sports will offset losses from the drop in JD Sports' long position.| JLEN Environmental vs. Advanced Medical Solutions | JLEN Environmental vs. Deltex Medical Group | JLEN Environmental vs. Axway Software SA | JLEN Environmental vs. Pets at Home |
| JD Sports vs. Toyota Motor Corp | JD Sports vs. SoftBank Group Corp | JD Sports vs. OTP Bank Nyrt | JD Sports vs. Las Vegas Sands |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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