Correlation Between JE Cleantech and Gorman Rupp

Can any of the company-specific risk be diversified away by investing in both JE Cleantech and Gorman Rupp 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 JE Cleantech and Gorman Rupp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JE Cleantech Holdings and Gorman Rupp, you can compare the effects of market volatilities on JE Cleantech and Gorman Rupp 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 JE Cleantech with a short position of Gorman Rupp. Check out your portfolio center. Please also check ongoing floating volatility patterns of JE Cleantech and Gorman Rupp.

Diversification Opportunities for JE Cleantech and Gorman Rupp

-0.19

Correlation Coefficient

JE Cleantech  Gorman Rupp

Good diversification

The 3 months correlation between JCSE and Gorman is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding JE Cleantech Holdings and Gorman Rupp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gorman Rupp and JE Cleantech 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 JE Cleantech Holdings are associated (or correlated) with Gorman Rupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gorman Rupp has no effect on the direction of JE Cleantech i.e., JE Cleantech and Gorman Rupp go up and down completely randomly.

Pair Corralation between JE Cleantech and Gorman Rupp

Given the investment horizon of 90 days JE Cleantech Holdings is expected to under-perform the Gorman Rupp. In addition to that, JE Cleantech is 3.15 times more volatile than Gorman Rupp. It trades about -0.05 of its total potential returns per unit of risk. Gorman Rupp is currently generating about 0.17 per unit of volatility. If you would invest  3,866  in Gorman Rupp on August 31, 2024 and sell it today you would earn a total of  363.00  from holding Gorman Rupp or generate 9.39% return on investment over 90 days.

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

JE Cleantech Holdings  vs.  Gorman Rupp

JE Cleantech Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JE Cleantech Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, JE Cleantech exhibited solid returns over the last few months and may actually be approaching a breakup point.

Gorman Rupp

Risk-Adjusted Performance

9 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gorman Rupp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Gorman Rupp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JE Cleantech and Gorman Rupp

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

The idea behind JE Cleantech Holdings and Gorman Rupp 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.