Correlation Between JD SPORTS and KOOL2PLAY
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
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 Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
JD SPORTS FASH vs. KOOL2PLAY SA ZY
Performance |
Timeline |
JD SPORTS FASH |
KOOL2PLAY SA ZY |
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.JD SPORTS vs. AOYAMA TRADING | JD SPORTS vs. Global Fashion Group | JD SPORTS vs. Superior Plus Corp | JD SPORTS vs. NMI Holdings |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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