Correlation Between Crown Holdings and JX Luxventure

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

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

Diversification Opportunities for Crown Holdings and JX Luxventure

0.7

Correlation Coefficient

Crown Holdings  JX Luxventure

Poor diversification

The 3 months correlation between Crown and JXG is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Crown Holdings 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 Crown Holdings 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 Crown Holdings 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 Crown Holdings i.e., Crown Holdings and JX Luxventure go up and down completely randomly.

Pair Corralation between Crown Holdings and JX Luxventure

Considering the 90-day investment horizon Crown Holdings is expected to generate 0.16 times more return on investment than JX Luxventure. However, Crown Holdings is 6.07 times less risky than JX Luxventure. It trades about 0.0 of its potential returns per unit of risk. JX Luxventure Limited is currently generating about -0.01 per unit of risk. If you would invest  8,475  in Crown Holdings on October 8, 2024 and sell it today you would lose (421.00) from holding Crown Holdings or give up 4.97% of portfolio value over 90 days.

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

Crown Holdings  vs.  JX Luxventure Limited

Crown Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crown Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

JX Luxventure Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JX Luxventure Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Crown Holdings and JX Luxventure

The main advantage of trading using opposite Crown Holdings and JX Luxventure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crown Holdings 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 Crown Holdings 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.