Correlation Between JX Luxventure and Ermenegildo Zegna

Can any of the company-specific risk be diversified away by investing in both JX Luxventure and Ermenegildo Zegna 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 JX Luxventure and Ermenegildo Zegna into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JX Luxventure Limited and Ermenegildo Zegna NV, you can compare the effects of market volatilities on JX Luxventure and Ermenegildo Zegna 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 JX Luxventure with a short position of Ermenegildo Zegna. Check out your portfolio center. Please also check ongoing floating volatility patterns of JX Luxventure and Ermenegildo Zegna.

Diversification Opportunities for JX Luxventure and Ermenegildo Zegna

-0.27

Correlation Coefficient

JX Luxventure  Ermenegildo Zegna

Very good diversification

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

Pair Corralation between JX Luxventure and Ermenegildo Zegna

Considering the 90-day investment horizon JX Luxventure Limited is expected to generate 12.91 times more return on investment than Ermenegildo Zegna. However, JX Luxventure is 12.91 times more volatile than Ermenegildo Zegna NV. It trades about 0.11 of its potential returns per unit of risk. Ermenegildo Zegna NV is currently generating about 0.04 per unit of risk. If you would invest  144.00  in JX Luxventure Limited on October 23, 2024 and sell it today you would earn a total of  133.00  from holding JX Luxventure Limited or generate 92.36% return on investment over 90 days.

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

JX Luxventure Limited  vs.  Ermenegildo Zegna NV

JX Luxventure Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JX Luxventure Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, JX Luxventure reported solid returns over the last few months and may actually be approaching a breakup point.

Ermenegildo Zegna

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ermenegildo Zegna NV are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Ermenegildo Zegna is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with JX Luxventure and Ermenegildo Zegna

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

The idea behind JX Luxventure Limited and Ermenegildo Zegna NV 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.