Correlation Between Global E and J Long

Can any of the company-specific risk be diversified away by investing in both Global E and J Long 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 Global E and J Long into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global E Online and J Long Group Limited, you can compare the effects of market volatilities on Global E and J Long 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 Global E with a short position of J Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global E and J Long.

Diversification Opportunities for Global E and J Long

-0.6

Correlation Coefficient

Global E  J Long

Excellent diversification

The 3 months correlation between Global and J Long is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Global E Online and J Long Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J Long Group and Global E 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 Global E Online are associated (or correlated) with J Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J Long Group has no effect on the direction of Global E i.e., Global E and J Long go up and down completely randomly.

Pair Corralation between Global E and J Long

Given the investment horizon of 90 days Global E Online is expected to generate 0.42 times more return on investment than J Long. However, Global E Online is 2.39 times less risky than J Long. It trades about 0.35 of its potential returns per unit of risk. J Long Group Limited is currently generating about -0.01 per unit of risk. If you would invest  4,274  in Global E Online on September 20, 2024 and sell it today you would earn a total of  1,084  from holding Global E Online or generate 25.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Global E Online  vs.  J Long Group Limited

Global E Online

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global E Online are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental drivers, Global E exhibited solid returns over the last few months and may actually be approaching a breakup point.

J Long Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days J Long Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, J Long is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Global E and J Long

The main advantage of trading using opposite Global E and J Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global E position performs unexpectedly, J Long 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 J Long will offset losses from the drop in J Long's long position.

The idea behind Global E Online and J Long Group Limited 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.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.