Correlation Between J Long and Xcel Brands

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

Diversification Opportunities for J Long and Xcel Brands

0.03

Correlation Coefficient

J Long  Xcel Brands

Significant diversification

The 3 months correlation between J Long and Xcel is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding J Long Group Limited and Xcel Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xcel 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 Xcel Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xcel Brands has no effect on the direction of J Long i.e., J Long and Xcel Brands go up and down completely randomly.

Pair Corralation between J Long and Xcel Brands

Allowing for the 90-day total investment horizon J Long Group Limited is expected to generate 1.73 times more return on investment than Xcel Brands. However, J Long is 1.73 times more volatile than Xcel Brands. It trades about 0.08 of its potential returns per unit of risk. Xcel Brands is currently generating about -0.01 per unit of risk. If you would invest  365.00  in J Long Group Limited on December 27, 2024 and sell it today you would earn a total of  68.00  from holding J Long Group Limited or generate 18.63% return on investment over 90 days.

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

J Long Group Limited  vs.  Xcel Brands

J Long Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in J Long Group Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal essential indicators, J Long disclosed solid returns over the last few months and may actually be approaching a breakup point.

Xcel Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xcel Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Xcel Brands is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with J Long and Xcel Brands

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

The idea behind J Long Group Limited and Xcel 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.