Correlation Between Ebro Foods and JLEN Environmental

Can any of the company-specific risk be diversified away by investing in both Ebro Foods and JLEN Environmental 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 Ebro Foods and JLEN Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ebro Foods and JLEN Environmental Assets, you can compare the effects of market volatilities on Ebro Foods and JLEN Environmental 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 Ebro Foods with a short position of JLEN Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and JLEN Environmental.

Diversification Opportunities for Ebro Foods and JLEN Environmental

0.22

Correlation Coefficient

Ebro Foods  JLEN Environmental

Modest diversification

The 3 months correlation between Ebro and JLEN is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and JLEN Environmental Assets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JLEN Environmental Assets and Ebro Foods 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 Ebro Foods are associated (or correlated) with JLEN Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JLEN Environmental Assets has no effect on the direction of Ebro Foods i.e., Ebro Foods and JLEN Environmental go up and down completely randomly.

Pair Corralation between Ebro Foods and JLEN Environmental

Assuming the 90 days trading horizon Ebro Foods is expected to generate 0.41 times more return on investment than JLEN Environmental. However, Ebro Foods is 2.45 times less risky than JLEN Environmental. It trades about 0.2 of its potential returns per unit of risk. JLEN Environmental Assets is currently generating about -0.01 per unit of risk. If you would invest  1,555  in Ebro Foods on December 30, 2024 and sell it today you would earn a total of  133.00  from holding Ebro Foods or generate 8.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Ebro Foods  vs.  JLEN Environmental Assets

Ebro Foods

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ebro Foods are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Ebro Foods may actually be approaching a critical reversion point that can send shares even higher in April 2025.

JLEN Environmental Assets

Risk-Adjusted Performance

Very Weak

Over the last 90 days JLEN Environmental Assets has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, JLEN Environmental is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ebro Foods and JLEN Environmental

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

The idea behind Ebro Foods and JLEN Environmental Assets 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.