Correlation Between JD SPORTS and Hitachi
Can any of the company-specific risk be diversified away by investing in both JD SPORTS and Hitachi 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 Hitachi 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 Hitachi, you can compare the effects of market volatilities on JD SPORTS and Hitachi 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 Hitachi. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD SPORTS and Hitachi.
Diversification Opportunities for JD SPORTS and Hitachi
Good diversification
The 3 months correlation between 9JD and Hitachi is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding JD SPORTS FASH and Hitachi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi 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 Hitachi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitachi has no effect on the direction of JD SPORTS i.e., JD SPORTS and Hitachi go up and down completely randomly.
Pair Corralation between JD SPORTS and Hitachi
Assuming the 90 days horizon JD SPORTS FASH is expected to generate 2.68 times more return on investment than Hitachi. However, JD SPORTS is 2.68 times more volatile than Hitachi. It trades about -0.02 of its potential returns per unit of risk. Hitachi is currently generating about -0.21 per unit of risk. If you would invest 118.00 in JD SPORTS FASH on October 17, 2024 and sell it today you would lose (5.00) from holding JD SPORTS FASH or give up 4.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD SPORTS FASH vs. Hitachi
Performance |
| Timeline |
| JD SPORTS FASH |
| Hitachi |
JD SPORTS and Hitachi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD SPORTS and Hitachi
The main advantage of trading using opposite JD SPORTS and Hitachi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD SPORTS position performs unexpectedly, Hitachi 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 Hitachi will offset losses from the drop in Hitachi's long position.| JD SPORTS vs. Endeavour Mining PLC | JD SPORTS vs. Yanzhou Coal Mining | JD SPORTS vs. 24SEVENOFFICE GROUP AB | JD SPORTS vs. ARDAGH METAL PACDL 0001 |
| Hitachi vs. Air Transport Services | Hitachi vs. JD SPORTS FASH | Hitachi vs. Cars Inc | Hitachi vs. China Resources Beer |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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