Correlation Between JE Cleantech and Laser Photonics

Can any of the company-specific risk be diversified away by investing in both JE Cleantech and Laser Photonics 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 Laser Photonics 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 Laser Photonics, you can compare the effects of market volatilities on JE Cleantech and Laser Photonics 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 Laser Photonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of JE Cleantech and Laser Photonics.

Diversification Opportunities for JE Cleantech and Laser Photonics

0.48

Correlation Coefficient

JE Cleantech  Laser Photonics

Very weak diversification

The 3 months correlation between JCSE and Laser is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding JE Cleantech Holdings and Laser Photonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laser Photonics 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 Laser Photonics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laser Photonics has no effect on the direction of JE Cleantech i.e., JE Cleantech and Laser Photonics go up and down completely randomly.

Pair Corralation between JE Cleantech and Laser Photonics

Given the investment horizon of 90 days JE Cleantech Holdings is expected to generate 1.14 times more return on investment than Laser Photonics. However, JE Cleantech is 1.14 times more volatile than Laser Photonics. It trades about -0.04 of its potential returns per unit of risk. Laser Photonics is currently generating about -0.22 per unit of risk. If you would invest  137.00  in JE Cleantech Holdings on December 27, 2024 and sell it today you would lose (25.00) from holding JE Cleantech Holdings or give up 18.25% of portfolio value over 90 days.

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

JE Cleantech Holdings  vs.  Laser Photonics

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.

Laser Photonics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Laser Photonics 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 JE Cleantech and Laser Photonics

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

The idea behind JE Cleantech Holdings and Laser Photonics 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.