Correlation Between JD and Air Transport
Can any of the company-specific risk be diversified away by investing in both JD and Air Transport 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 Air Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JD Inc and Air Transport Services, you can compare the effects of market volatilities on JD and Air Transport 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 Air Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD and Air Transport.
Diversification Opportunities for JD and Air Transport
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between JD and Air is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding JD Inc and Air Transport Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Transport 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 are associated (or correlated) with Air Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Transport Services has no effect on the direction of JD i.e., JD and Air Transport go up and down completely randomly.
Pair Corralation between JD and Air Transport
Assuming the 90 days trading horizon JD Inc is expected to generate 6.15 times more return on investment than Air Transport. However, JD is 6.15 times more volatile than Air Transport Services. It trades about 0.11 of its potential returns per unit of risk. Air Transport Services is currently generating about 0.08 per unit of risk. If you would invest 1,811 in JD Inc on September 12, 2024 and sell it today you would earn a total of 139.00 from holding JD Inc or generate 7.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Inc vs. Air Transport Services
Performance |
| Timeline |
| JD Inc |
| Air Transport Services |
JD and Air Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD and Air Transport
The main advantage of trading using opposite JD and Air Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD position performs unexpectedly, Air Transport 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 Air Transport will offset losses from the drop in Air Transport's long position.| JD vs. INDO RAMA SYNTHETIC | JD vs. SHIN ETSU CHEMICAL | JD vs. Singapore Telecommunications Limited | JD vs. Treasury Wine Estates |
| Air Transport vs. Aena SME SA | Air Transport vs. Superior Plus Corp | Air Transport vs. SIVERS SEMICONDUCTORS AB | Air Transport vs. Norsk Hydro ASA |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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