Correlation Between JLEN Environmental and Erste Group

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

By analyzing existing cross correlation between JLEN Environmental Assets and Erste Group Bank, you can compare the effects of market volatilities on JLEN Environmental and Erste Group 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 JLEN Environmental with a short position of Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of JLEN Environmental and Erste Group.

Diversification Opportunities for JLEN Environmental and Erste Group

0.27

Correlation Coefficient

JLEN Environmental  Erste Group

Modest diversification

The 3 months correlation between JLEN and Erste is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding JLEN Environmental Assets and Erste Group Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erste Group Bank and JLEN Environmental 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 JLEN Environmental Assets are associated (or correlated) with Erste Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erste Group Bank has no effect on the direction of JLEN Environmental i.e., JLEN Environmental and Erste Group go up and down completely randomly.

Pair Corralation between JLEN Environmental and Erste Group

Assuming the 90 days trading horizon JLEN Environmental is expected to generate 2.73 times less return on investment than Erste Group. But when comparing it to its historical volatility, JLEN Environmental Assets is 1.45 times less risky than Erste Group. It trades about 0.06 of its potential returns per unit of risk. Erste Group Bank is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  5,884  in Erste Group Bank on December 23, 2024 and sell it today you would earn a total of  847.00  from holding Erste Group Bank or generate 14.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

JLEN Environmental Assets  vs.  Erste Group Bank

JLEN Environmental Assets

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JLEN Environmental Assets are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, JLEN Environmental is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Erste Group Bank

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Erste Group Bank are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Erste Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JLEN Environmental and Erste Group

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

The idea behind JLEN Environmental Assets and Erste Group Bank 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.