Correlation Between J Long and Kontoor Brands

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

Diversification Opportunities for J Long and Kontoor Brands

-0.44

Correlation Coefficient

J Long  Kontoor Brands

Very good diversification

The 3 months correlation between J Long and Kontoor is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding J Long Group Limited and Kontoor Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kontoor Brands 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 Kontoor Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kontoor Brands has no effect on the direction of J Long i.e., J Long and Kontoor Brands go up and down completely randomly.

Pair Corralation between J Long and Kontoor Brands

Allowing for the 90-day total investment horizon J Long is expected to generate 1.2 times less return on investment than Kontoor Brands. In addition to that, J Long is 5.03 times more volatile than Kontoor Brands. It trades about 0.02 of its total potential returns per unit of risk. Kontoor Brands is currently generating about 0.13 per unit of volatility. If you would invest  7,445  in Kontoor Brands on September 13, 2024 and sell it today you would earn a total of  1,478  from holding Kontoor Brands or generate 19.85% return on investment over 90 days.

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

J Long Group Limited  vs.  Kontoor Brands

J Long Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in J Long Group Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, J Long disclosed solid returns over the last few months and may actually be approaching a breakup point.

Kontoor Brands

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kontoor Brands are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Kontoor Brands sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with J Long and Kontoor Brands

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

The idea behind J Long Group Limited and Kontoor Brands 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.