Correlation Between JD SPORTS and KOOL2PLAY

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Can any of the company-specific risk be diversified away by investing in both JD SPORTS and KOOL2PLAY 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 SPORTS and KOOL2PLAY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JD SPORTS FASH and KOOL2PLAY SA ZY, you can compare the effects of market volatilities on JD SPORTS and KOOL2PLAY 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 SPORTS with a short position of KOOL2PLAY. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD SPORTS and KOOL2PLAY.

Diversification Opportunities for JD SPORTS and KOOL2PLAY

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between 9JD and KOOL2PLAY is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding JD SPORTS FASH and KOOL2PLAY SA ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KOOL2PLAY SA ZY and JD SPORTS 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 SPORTS FASH are associated (or correlated) with KOOL2PLAY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KOOL2PLAY SA ZY has no effect on the direction of JD SPORTS i.e., JD SPORTS and KOOL2PLAY go up and down completely randomly.

Pair Corralation between JD SPORTS and KOOL2PLAY

Assuming the 90 days horizon JD SPORTS FASH is expected to generate 0.45 times more return on investment than KOOL2PLAY. However, JD SPORTS FASH is 2.22 times less risky than KOOL2PLAY. It trades about -0.01 of its potential returns per unit of risk. KOOL2PLAY SA ZY is currently generating about -0.03 per unit of risk. If you would invest  158.00  in JD SPORTS FASH on September 1, 2024 and sell it today you would lose (38.00) from holding JD SPORTS FASH or give up 24.05% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

JD SPORTS FASH  vs.  KOOL2PLAY SA ZY

 Performance 
       Timeline  
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 December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
KOOL2PLAY SA ZY 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days KOOL2PLAY SA ZY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, KOOL2PLAY is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

JD SPORTS and KOOL2PLAY Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JD SPORTS and KOOL2PLAY

The main advantage of trading using opposite JD SPORTS and KOOL2PLAY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD SPORTS position performs unexpectedly, KOOL2PLAY 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 KOOL2PLAY will offset losses from the drop in KOOL2PLAY's long position.
The idea behind JD SPORTS FASH and KOOL2PLAY SA ZY 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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