Correlation Between JLEN Environmental and River

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

Diversification Opportunities for JLEN Environmental and River

-0.62

Correlation Coefficient

JLEN Environmental  River

Excellent diversification

The 3 months correlation between JLEN and River is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding JLEN Environmental Assets and River and Mercantile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on River and Mercantile 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 River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of River and Mercantile has no effect on the direction of JLEN Environmental i.e., JLEN Environmental and River go up and down completely randomly.

Pair Corralation between JLEN Environmental and River

Assuming the 90 days trading horizon JLEN Environmental Assets is expected to under-perform the River. In addition to that, JLEN Environmental is 1.21 times more volatile than River and Mercantile. It trades about -0.05 of its total potential returns per unit of risk. River and Mercantile is currently generating about 0.02 per unit of volatility. If you would invest  16,300  in River and Mercantile on October 21, 2024 and sell it today you would earn a total of  1,350  from holding River and Mercantile or generate 8.28% return on investment over 90 days.

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

JLEN Environmental Assets  vs.  River and Mercantile

JLEN Environmental Assets

Risk-Adjusted Performance

0 of 100

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

River and Mercantile

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in River and Mercantile are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, River is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with JLEN Environmental and River

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

The idea behind JLEN Environmental Assets and River and Mercantile 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.