Correlation Between Continental and J Long

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

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

Diversification Opportunities for Continental and J Long

-0.02

Correlation Coefficient

Continental  J Long

Good diversification

The 3 months correlation between Continental and J Long is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Caleres 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 Continental 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 Caleres 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 Continental i.e., Continental and J Long go up and down completely randomly.

Pair Corralation between Continental and J Long

Considering the 90-day investment horizon Caleres is expected to generate 0.14 times more return on investment than J Long. However, Caleres is 7.34 times less risky than J Long. It trades about 0.06 of its potential returns per unit of risk. J Long Group Limited is currently generating about -0.02 per unit of risk. If you would invest  3,069  in Caleres on August 29, 2024 and sell it today you would earn a total of  94.00  from holding Caleres or generate 3.06% return on investment over 90 days.

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

Caleres  vs.  J Long Group Limited

Continental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caleres has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

J Long Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days J Long Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, J Long is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Continental and J Long

The main advantage of trading using opposite Continental and J Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Continental 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 Caleres 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.