Correlation Between Lecron Energy and Jiangxi JDL

Can any of the company-specific risk be diversified away by investing in both Lecron Energy and Jiangxi JDL 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 Lecron Energy and Jiangxi JDL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lecron Energy Saving and Jiangxi JDL Environmental, you can compare the effects of market volatilities on Lecron Energy and Jiangxi JDL 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 Lecron Energy with a short position of Jiangxi JDL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lecron Energy and Jiangxi JDL.

Diversification Opportunities for Lecron Energy and Jiangxi JDL

0.77

Correlation Coefficient

Lecron Energy  Jiangxi JDL

Poor diversification

The 3 months correlation between Lecron and Jiangxi is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Lecron Energy Saving and Jiangxi JDL Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangxi JDL Environmental and Lecron Energy 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 Lecron Energy Saving are associated (or correlated) with Jiangxi JDL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangxi JDL Environmental has no effect on the direction of Lecron Energy i.e., Lecron Energy and Jiangxi JDL go up and down completely randomly.

Pair Corralation between Lecron Energy and Jiangxi JDL

Assuming the 90 days trading horizon Lecron Energy Saving is expected to under-perform the Jiangxi JDL. In addition to that, Lecron Energy is 3.24 times more volatile than Jiangxi JDL Environmental. It trades about -0.09 of its total potential returns per unit of risk. Jiangxi JDL Environmental is currently generating about 0.04 per unit of volatility. If you would invest  1,124  in Jiangxi JDL Environmental on December 25, 2024 and sell it today you would earn a total of  24.00  from holding Jiangxi JDL Environmental or generate 2.14% return on investment over 90 days.

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

Lecron Energy Saving  vs.  Jiangxi JDL Environmental

Lecron Energy Saving

Risk-Adjusted Performance

Very Weak

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

Jiangxi JDL Environmental

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangxi JDL Environmental are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Jiangxi JDL is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lecron Energy and Jiangxi JDL

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

The idea behind Lecron Energy Saving and Jiangxi JDL Environmental 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.