Correlation Between Hillenbrand and JE Cleantech

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

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

Diversification Opportunities for Hillenbrand and JE Cleantech

-0.19

Correlation Coefficient

Hillenbrand  JE Cleantech

Good diversification

The 3 months correlation between Hillenbrand and JCSE is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Hillenbrand 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 Hillenbrand 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 Hillenbrand 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 Hillenbrand i.e., Hillenbrand and JE Cleantech go up and down completely randomly.

Pair Corralation between Hillenbrand and JE Cleantech

Allowing for the 90-day total investment horizon Hillenbrand is expected to generate 1.33 times less return on investment than JE Cleantech. But when comparing it to its historical volatility, Hillenbrand is 3.07 times less risky than JE Cleantech. It trades about 0.25 of its potential returns per unit of risk. JE Cleantech Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  140.00  in JE Cleantech Holdings on September 5, 2024 and sell it today you would earn a total of  25.00  from holding JE Cleantech Holdings or generate 17.86% return on investment over 90 days.

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

Hillenbrand  vs.  JE Cleantech Holdings

Hillenbrand

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hillenbrand are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward indicators, Hillenbrand demonstrated solid returns over the last few months and may actually be approaching a breakup point.

JE Cleantech Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JE Cleantech Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, JE Cleantech exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hillenbrand and JE Cleantech

The main advantage of trading using opposite Hillenbrand and JE Cleantech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hillenbrand 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 Hillenbrand 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.