Correlation Between JonDeTech Sensors and Lifeclean International

Can any of the company-specific risk be diversified away by investing in both JonDeTech Sensors and Lifeclean International 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 JonDeTech Sensors and Lifeclean International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JonDeTech Sensors and Lifeclean International AB, you can compare the effects of market volatilities on JonDeTech Sensors and Lifeclean International 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 JonDeTech Sensors with a short position of Lifeclean International. Check out your portfolio center. Please also check ongoing floating volatility patterns of JonDeTech Sensors and Lifeclean International.

Diversification Opportunities for JonDeTech Sensors and Lifeclean International

0.86

Correlation Coefficient

JonDeTech Sensors  Lifeclean International

Very poor diversification

The 3 months correlation between JonDeTech and Lifeclean is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding JonDeTech Sensors and Lifeclean International AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeclean International and JonDeTech Sensors 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 JonDeTech Sensors are associated (or correlated) with Lifeclean International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifeclean International has no effect on the direction of JonDeTech Sensors i.e., JonDeTech Sensors and Lifeclean International go up and down completely randomly.

Pair Corralation between JonDeTech Sensors and Lifeclean International

Assuming the 90 days trading horizon JonDeTech Sensors is expected to generate 0.99 times more return on investment than Lifeclean International. However, JonDeTech Sensors is 1.01 times less risky than Lifeclean International. It trades about 0.06 of its potential returns per unit of risk. Lifeclean International AB is currently generating about -0.23 per unit of risk. If you would invest  258.00  in JonDeTech Sensors on September 6, 2024 and sell it today you would earn a total of  12.00  from holding JonDeTech Sensors or generate 4.65% return on investment over 90 days.

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

JonDeTech Sensors  vs.  Lifeclean International AB

JonDeTech Sensors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JonDeTech Sensors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Lifeclean International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lifeclean International AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with JonDeTech Sensors and Lifeclean International

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

The idea behind JonDeTech Sensors and Lifeclean International AB 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.