Correlation Between JLEN Environmental and Associated British

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

Diversification Opportunities for JLEN Environmental and Associated British

0.8

Correlation Coefficient

JLEN Environmental  Associated British

Very poor diversification

The 3 months correlation between JLEN and Associated is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding JLEN Environmental Assets and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods 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 Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of JLEN Environmental i.e., JLEN Environmental and Associated British go up and down completely randomly.

Pair Corralation between JLEN Environmental and Associated British

Assuming the 90 days trading horizon JLEN Environmental Assets is expected to generate 1.09 times more return on investment than Associated British. However, JLEN Environmental is 1.09 times more volatile than Associated British Foods. It trades about -0.07 of its potential returns per unit of risk. Associated British Foods is currently generating about -0.18 per unit of risk. If you would invest  7,668  in JLEN Environmental Assets on December 1, 2024 and sell it today you would lose (558.00) from holding JLEN Environmental Assets or give up 7.28% of portfolio value over 90 days.

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

JLEN Environmental Assets  vs.  Associated British Foods

JLEN Environmental Assets

Risk-Adjusted Performance

Very Weak

Over the last 90 days JLEN Environmental Assets has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Associated British Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Associated British Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental 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 JLEN Environmental and Associated British

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

The idea behind JLEN Environmental Assets and Associated British Foods 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.