Correlation Between Graco and JE Cleantech

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

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

Diversification Opportunities for Graco and JE Cleantech

0.05

Correlation Coefficient

Graco  JE Cleantech

Significant diversification

The 3 months correlation between Graco and JCSE is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Graco Inc 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 Graco 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 Graco Inc 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 Graco i.e., Graco and JE Cleantech go up and down completely randomly.

Pair Corralation between Graco and JE Cleantech

Considering the 90-day investment horizon Graco Inc is expected to generate 0.23 times more return on investment than JE Cleantech. However, Graco Inc is 4.29 times less risky than JE Cleantech. It trades about 0.01 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  8,461  in Graco Inc on December 26, 2024 and sell it today you would earn a total of  1.00  from holding Graco Inc or generate 0.01% return on investment over 90 days.

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

Graco Inc  vs.  JE Cleantech Holdings

Graco Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Graco Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Graco is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

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 Graco and JE Cleantech

The main advantage of trading using opposite Graco and JE Cleantech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graco 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 Graco Inc 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.

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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.