Correlation Between Haier Smart and JD SPORTS
Can any of the company-specific risk be diversified away by investing in both Haier Smart 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 Haier Smart and JD SPORTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Haier Smart Home and JD SPORTS FASH, you can compare the effects of market volatilities on Haier Smart 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 Haier Smart with a short position of JD SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haier Smart and JD SPORTS.
Diversification Opportunities for Haier Smart and JD SPORTS
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Haier and 9JD is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Haier Smart Home 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 Haier Smart 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 Haier Smart Home 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 Haier Smart i.e., Haier Smart and JD SPORTS go up and down completely randomly.
Pair Corralation between Haier Smart and JD SPORTS
Assuming the 90 days trading horizon Haier Smart Home is expected to generate 0.51 times more return on investment than JD SPORTS. However, Haier Smart Home is 1.97 times less risky than JD SPORTS. It trades about 0.07 of its potential returns per unit of risk. JD SPORTS FASH is currently generating about -0.19 per unit of risk. If you would invest 174.00 in Haier Smart Home on September 21, 2024 and sell it today you would earn a total of 5.00 from holding Haier Smart Home or generate 2.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Haier Smart Home vs. JD SPORTS FASH
Performance |
| Timeline |
| Haier Smart Home |
| JD SPORTS FASH |
Haier Smart and JD SPORTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Haier Smart and JD SPORTS
The main advantage of trading using opposite Haier Smart and JD SPORTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haier Smart 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.| Haier Smart vs. New Residential Investment | Haier Smart vs. Warner Music Group | Haier Smart vs. SLR Investment Corp | Haier Smart vs. LPKF Laser Electronics |
| JD SPORTS vs. LGI Homes | JD SPORTS vs. American Homes 4 | JD SPORTS vs. X FAB Silicon Foundries | JD SPORTS vs. Haier Smart Home |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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