Correlation Between Ecofibre and Jade Gas

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

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

Diversification Opportunities for Ecofibre and Jade Gas

0.79

Correlation Coefficient

Ecofibre  Jade Gas

Poor diversification

The 3 months correlation between Ecofibre and Jade is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Ecofibre and Jade Gas Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jade Gas Holdings and Ecofibre 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 Ecofibre are associated (or correlated) with Jade Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jade Gas Holdings has no effect on the direction of Ecofibre i.e., Ecofibre and Jade Gas go up and down completely randomly.

Pair Corralation between Ecofibre and Jade Gas

Assuming the 90 days trading horizon Ecofibre is expected to under-perform the Jade Gas. In addition to that, Ecofibre is 1.78 times more volatile than Jade Gas Holdings. It trades about -0.07 of its total potential returns per unit of risk. Jade Gas Holdings is currently generating about -0.12 per unit of volatility. If you would invest  3.60  in Jade Gas Holdings on October 22, 2024 and sell it today you would lose (0.25) from holding Jade Gas Holdings or give up 6.94% of portfolio value over 90 days.

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

Ecofibre  vs.  Jade Gas Holdings

Ecofibre

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ecofibre has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Jade Gas Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jade Gas Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Ecofibre and Jade Gas

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

The idea behind Ecofibre and Jade Gas 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.