Correlation Between Avery Dennison and JX Luxventure

Can any of the company-specific risk be diversified away by investing in both Avery Dennison and JX Luxventure 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 Avery Dennison and JX Luxventure into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Avery Dennison Corp and JX Luxventure Limited, you can compare the effects of market volatilities on Avery Dennison and JX Luxventure 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 Avery Dennison with a short position of JX Luxventure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avery Dennison and JX Luxventure.

Diversification Opportunities for Avery Dennison and JX Luxventure

-0.09

Correlation Coefficient

Avery Dennison  JX Luxventure

Good diversification

The 3 months correlation between Avery and JXG is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Avery Dennison Corp and JX Luxventure Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JX Luxventure Limited and Avery Dennison 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 Avery Dennison Corp are associated (or correlated) with JX Luxventure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JX Luxventure Limited has no effect on the direction of Avery Dennison i.e., Avery Dennison and JX Luxventure go up and down completely randomly.

Pair Corralation between Avery Dennison and JX Luxventure

Considering the 90-day investment horizon Avery Dennison is expected to generate 24.76 times less return on investment than JX Luxventure. But when comparing it to its historical volatility, Avery Dennison Corp is 11.26 times less risky than JX Luxventure. It trades about 0.01 of its potential returns per unit of risk. JX Luxventure Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  890.00  in JX Luxventure Limited on October 23, 2024 and sell it today you would lose (613.00) from holding JX Luxventure Limited or give up 68.88% of portfolio value over 90 days.

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

Avery Dennison Corp  vs.  JX Luxventure Limited

Avery Dennison Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avery Dennison Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

JX Luxventure Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JX Luxventure Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, JX Luxventure reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Avery Dennison and JX Luxventure

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

The idea behind Avery Dennison Corp and JX Luxventure 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.

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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.