Correlation Between JD and Polished

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

Diversification Opportunities for JD and Polished

-0.6

Correlation Coefficient

JD  Polished

Excellent diversification

The 3 months correlation between JD and Polished is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding JD Inc Adr and Polished in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polished 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 Polished. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polished has no effect on the direction of JD i.e., JD and Polished go up and down completely randomly.

Pair Corralation between JD and Polished

If you would invest  2,594  in JD Inc Adr on February 6, 2024 and sell it today you would earn a total of  689.00  from holding JD Inc Adr or generate 26.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

JD Inc Adr  vs.  Polished

JD Inc Adr

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JD Inc Adr are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, JD exhibited solid returns over the last few months and may actually be approaching a breakup point.

Polished

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Polished has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Polished is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with JD and Polished

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

The idea behind JD Inc Adr and Polished 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.