Correlation Between Levi Strauss and J Long

Can any of the company-specific risk be diversified away by investing in both Levi Strauss and J Long 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 Levi Strauss and J Long into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Levi Strauss Co and J Long Group Limited, you can compare the effects of market volatilities on Levi Strauss and J Long 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 Levi Strauss with a short position of J Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Levi Strauss and J Long.

Diversification Opportunities for Levi Strauss and J Long

0.49

Correlation Coefficient

Levi Strauss  J Long

Very weak diversification

The 3 months correlation between Levi and J Long is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Levi Strauss Co and J Long Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J Long Group and Levi Strauss 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 Levi Strauss Co are associated (or correlated) with J Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J Long Group has no effect on the direction of Levi Strauss i.e., Levi Strauss and J Long go up and down completely randomly.

Pair Corralation between Levi Strauss and J Long

Given the investment horizon of 90 days Levi Strauss Co is expected to generate 0.25 times more return on investment than J Long. However, Levi Strauss Co is 3.93 times less risky than J Long. It trades about 0.01 of its potential returns per unit of risk. J Long Group Limited is currently generating about -0.03 per unit of risk. If you would invest  1,784  in Levi Strauss Co on December 2, 2024 and sell it today you would earn a total of  13.00  from holding Levi Strauss Co or generate 0.73% return on investment over 90 days.

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

Levi Strauss Co  vs.  J Long Group Limited

Levi Strauss

Risk-Adjusted Performance

Very Weak

Over the last 90 days Levi Strauss Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Levi Strauss is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

J Long Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in J Long Group Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain essential indicators, J Long disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Levi Strauss and J Long

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

The idea behind Levi Strauss Co and J Long Group Limited 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.