Correlation Between KRAKATAU STEEL and JD SPORTS

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Can any of the company-specific risk be diversified away by investing in both KRAKATAU STEEL and JD SPORTS 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 KRAKATAU STEEL and JD SPORTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KRAKATAU STEEL B and JD SPORTS FASH, you can compare the effects of market volatilities on KRAKATAU STEEL and JD SPORTS 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 KRAKATAU STEEL with a short position of JD SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of KRAKATAU STEEL and JD SPORTS.

Diversification Opportunities for KRAKATAU STEEL and JD SPORTS

-0.73
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between KRAKATAU and 9JD is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding KRAKATAU STEEL B and JD SPORTS FASH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD SPORTS FASH and KRAKATAU STEEL 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 KRAKATAU STEEL B are associated (or correlated) with JD SPORTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD SPORTS FASH has no effect on the direction of KRAKATAU STEEL i.e., KRAKATAU STEEL and JD SPORTS go up and down completely randomly.

Pair Corralation between KRAKATAU STEEL and JD SPORTS

If you would invest  0.60  in KRAKATAU STEEL B on September 14, 2024 and sell it today you would earn a total of  0.00  from holding KRAKATAU STEEL B or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

KRAKATAU STEEL B   vs.  JD SPORTS FASH

 Performance 
       Timeline  
KRAKATAU STEEL B 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in KRAKATAU STEEL B are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile forward-looking signals, KRAKATAU STEEL unveiled solid returns over the last few months and may actually be approaching a breakup point.
JD SPORTS FASH 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days JD SPORTS FASH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

KRAKATAU STEEL and JD SPORTS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with KRAKATAU STEEL and JD SPORTS

The main advantage of trading using opposite KRAKATAU STEEL and JD SPORTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KRAKATAU STEEL position performs unexpectedly, JD SPORTS 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 JD SPORTS will offset losses from the drop in JD SPORTS's long position.
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The idea behind KRAKATAU STEEL B and JD SPORTS FASH 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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