Correlation Between JE Cleantech and Ingersoll Rand

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

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

Diversification Opportunities for JE Cleantech and Ingersoll Rand

0.17

Correlation Coefficient

JE Cleantech  Ingersoll Rand

Average diversification

The 3 months correlation between JCSE and Ingersoll is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding JE Cleantech Holdings and Ingersoll Rand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingersoll Rand and JE Cleantech 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 JE Cleantech Holdings are associated (or correlated) with Ingersoll Rand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingersoll Rand has no effect on the direction of JE Cleantech i.e., JE Cleantech and Ingersoll Rand go up and down completely randomly.

Pair Corralation between JE Cleantech and Ingersoll Rand

Given the investment horizon of 90 days JE Cleantech Holdings is expected to generate 8.13 times more return on investment than Ingersoll Rand. However, JE Cleantech is 8.13 times more volatile than Ingersoll Rand. It trades about 0.1 of its potential returns per unit of risk. Ingersoll Rand is currently generating about 0.19 per unit of risk. If you would invest  114.00  in JE Cleantech Holdings on September 5, 2024 and sell it today you would earn a total of  51.00  from holding JE Cleantech Holdings or generate 44.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

JE Cleantech Holdings  vs.  Ingersoll Rand

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.

Ingersoll Rand

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ingersoll Rand are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Ingersoll Rand reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JE Cleantech and Ingersoll Rand

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

The idea behind JE Cleantech Holdings and Ingersoll Rand 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.