Correlation Between JX Luxventure and Encore Capital
Can any of the company-specific risk be diversified away by investing in both JX Luxventure and Encore Capital 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 Encore Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JX Luxventure and Encore Capital Group, you can compare the effects of market volatilities on JX Luxventure and Encore Capital 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 Encore Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of JX Luxventure and Encore Capital.
Diversification Opportunities for JX Luxventure and Encore Capital
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between LLL and Encore is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding JX Luxventure and Encore Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Encore Capital Group 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 are associated (or correlated) with Encore Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Encore Capital Group has no effect on the direction of JX Luxventure i.e., JX Luxventure and Encore Capital go up and down completely randomly.
Pair Corralation between JX Luxventure and Encore Capital
Considering the 90-day investment horizon JX Luxventure is expected to under-perform the Encore Capital. In addition to that, JX Luxventure is 2.41 times more volatile than Encore Capital Group. It trades about -0.14 of its total potential returns per unit of risk. Encore Capital Group is currently generating about -0.02 per unit of volatility. If you would invest 6,028 in Encore Capital Group on January 31, 2024 and sell it today you would lose (1,822) from holding Encore Capital Group or give up 30.23% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 21.26% |
Values | Daily Returns |
JX Luxventure vs. Encore Capital Group
Performance |
Timeline |
JX Luxventure |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Encore Capital Group |
JX Luxventure and Encore Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with JX Luxventure and Encore Capital
The main advantage of trading using opposite JX Luxventure and Encore Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JX Luxventure position performs unexpectedly, Encore Capital 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 Encore Capital will offset losses from the drop in Encore Capital's long position.JX Luxventure vs. Relx PLC ADR | JX Luxventure vs. NetEase | JX Luxventure vs. Boyd Gaming | JX Luxventure vs. Playtika Holding Corp |
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Check out your portfolio center.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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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