Correlation Between Barnes and JE Cleantech

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

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

Diversification Opportunities for Barnes and JE Cleantech

-0.59

Correlation Coefficient

Barnes  JE Cleantech

Excellent diversification

The 3 months correlation between Barnes and JCSE is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and JE Cleantech Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JE Cleantech Holdings and Barnes 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 Barnes Group are associated (or correlated) with JE Cleantech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JE Cleantech Holdings has no effect on the direction of Barnes i.e., Barnes and JE Cleantech go up and down completely randomly.

Pair Corralation between Barnes and JE Cleantech

Taking into account the 90-day investment horizon Barnes Group is expected to generate 0.01 times more return on investment than JE Cleantech. However, Barnes Group is 69.47 times less risky than JE Cleantech. It trades about 0.39 of its potential returns per unit of risk. JE Cleantech Holdings is currently generating about -0.07 per unit of risk. If you would invest  4,720  in Barnes Group on December 26, 2024 and sell it today you would earn a total of  28.00  from holding Barnes Group or generate 0.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	33.33%
Values	Daily Returns

Barnes Group  vs.  JE Cleantech Holdings

Barnes Group

Risk-Adjusted Performance

Very Strong

Over the last 90 days Barnes Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Barnes is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

JE Cleantech Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days JE Cleantech Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Barnes and JE Cleantech

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

The idea behind Barnes Group and JE Cleantech Holdings 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.