Correlation Between JD and 1StdibsCom

Can any of the company-specific risk be diversified away by investing in both JD and 1StdibsCom 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 1StdibsCom 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 1StdibsCom, you can compare the effects of market volatilities on JD and 1StdibsCom 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 1StdibsCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD and 1StdibsCom.

Diversification Opportunities for JD and 1StdibsCom

0.82

Correlation Coefficient

JD  1StdibsCom

Very poor diversification

The 3 months correlation between JD and 1StdibsCom is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding JD Inc Adr and 1StdibsCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1StdibsCom 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 1StdibsCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1StdibsCom has no effect on the direction of JD i.e., JD and 1StdibsCom go up and down completely randomly.

Pair Corralation between JD and 1StdibsCom

Allowing for the 90-day total investment horizon JD Inc Adr is expected to under-perform the 1StdibsCom. But the stock apears to be less risky and, when comparing its historical volatility, JD Inc Adr is 1.05 times less risky than 1StdibsCom. The stock trades about -0.03 of its potential returns per unit of risk. The 1StdibsCom is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  596.00  in 1StdibsCom on January 25, 2024 and sell it today you would lose (56.00) from holding 1StdibsCom or give up 9.4% of portfolio value over 90 days.

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

JD Inc Adr  vs.  1StdibsCom

JD Inc Adr

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JD Inc Adr are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, JD exhibited solid returns over the last few months and may actually be approaching a breakup point.

1StdibsCom

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in 1StdibsCom are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental drivers, 1StdibsCom may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with JD and 1StdibsCom

The main advantage of trading using opposite JD and 1StdibsCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD position performs unexpectedly, 1StdibsCom 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 1StdibsCom will offset losses from the drop in 1StdibsCom's long position.

The idea behind JD Inc Adr and 1StdibsCom 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.