Correlation Between JD and Liquidity Services
Can any of the company-specific risk be diversified away by investing in both JD and Liquidity Services 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 JD and Liquidity Services into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JD Inc Adr and Liquidity Services, you can compare the effects of market volatilities on JD and Liquidity Services 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 JD with a short position of Liquidity Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD and Liquidity Services.
Diversification Opportunities for JD and Liquidity Services
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JD and Liquidity is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding JD Inc Adr and Liquidity Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liquidity Services and JD 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 JD Inc Adr are associated (or correlated) with Liquidity Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liquidity Services has no effect on the direction of JD i.e., JD and Liquidity Services go up and down completely randomly.
Pair Corralation between JD and Liquidity Services
Allowing for the 90-day total investment horizon JD Inc Adr is expected to generate 1.41 times more return on investment than Liquidity Services. However, JD is 1.41 times more volatile than Liquidity Services. It trades about 0.03 of its potential returns per unit of risk. Liquidity Services is currently generating about -0.04 per unit of risk. If you would invest 2,413 in JD Inc Adr on January 19, 2024 and sell it today you would earn a total of 133.00 from holding JD Inc Adr or generate 5.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Inc Adr vs. Liquidity Services
Performance |
| Timeline |
| JD Inc Adr |
| Liquidity Services |
JD and Liquidity Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD and Liquidity Services
The main advantage of trading using opposite JD and Liquidity Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD position performs unexpectedly, Liquidity Services 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 Liquidity Services will offset losses from the drop in Liquidity Services' long position.The idea behind JD Inc Adr and Liquidity Services 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.| Liquidity Services vs. JD Inc Adr | Liquidity Services vs. Sea | Liquidity Services vs. Vipshop Holdings Limited | Liquidity Services vs. Jumia Technologies AG |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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