Correlation Between J Long and AutoNation

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

By analyzing existing cross correlation between J Long Group Limited and AutoNation, you can compare the effects of market volatilities on J Long and AutoNation 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 J Long with a short position of AutoNation. Check out your portfolio center. Please also check ongoing floating volatility patterns of J Long and AutoNation.

Diversification Opportunities for J Long and AutoNation

0.48

Correlation Coefficient

J Long  AutoNation

Very weak diversification

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

Pair Corralation between J Long and AutoNation

Allowing for the 90-day total investment horizon J Long Group Limited is expected to under-perform the AutoNation. In addition to that, J Long is 4.86 times more volatile than AutoNation. It trades about -0.03 of its total potential returns per unit of risk. AutoNation is currently generating about 0.06 per unit of volatility. If you would invest  14,774  in AutoNation on December 2, 2024 and sell it today you would earn a total of  3,463  from holding AutoNation or generate 23.44% return on investment over 90 days.

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

J Long Group Limited  vs.  AutoNation

J Long Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in J Long Group Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain essential indicators, J Long disclosed solid returns over the last few months and may actually be approaching a breakup point.

AutoNation

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AutoNation are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, AutoNation is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with J Long and AutoNation

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

The idea behind J Long Group Limited and AutoNation 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.