Correlation Between JD SPORTS and Mitsui Chemicals
Can any of the company-specific risk be diversified away by investing in both JD SPORTS and Mitsui Chemicals 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 Mitsui Chemicals 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 Mitsui Chemicals, you can compare the effects of market volatilities on JD SPORTS and Mitsui Chemicals 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 Mitsui Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD SPORTS and Mitsui Chemicals.
Diversification Opportunities for JD SPORTS and Mitsui Chemicals
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 9JD and Mitsui is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding JD SPORTS FASH and Mitsui Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsui Chemicals 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 Mitsui Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsui Chemicals has no effect on the direction of JD SPORTS i.e., JD SPORTS and Mitsui Chemicals go up and down completely randomly.
Pair Corralation between JD SPORTS and Mitsui Chemicals
Assuming the 90 days horizon JD SPORTS FASH is expected to under-perform the Mitsui Chemicals. But the stock apears to be less risky and, when comparing its historical volatility, JD SPORTS FASH is 1.07 times less risky than Mitsui Chemicals. The stock trades about -0.39 of its potential returns per unit of risk. The Mitsui Chemicals is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 2,120 in Mitsui Chemicals on October 9, 2024 and sell it today you would lose (40.00) from holding Mitsui Chemicals or give up 1.89% 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. Mitsui Chemicals
Performance |
| Timeline |
| JD SPORTS FASH |
| Mitsui Chemicals |
JD SPORTS and Mitsui Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD SPORTS and Mitsui Chemicals
The main advantage of trading using opposite JD SPORTS and Mitsui Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD SPORTS position performs unexpectedly, Mitsui Chemicals 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 Mitsui Chemicals will offset losses from the drop in Mitsui Chemicals' long position.| JD SPORTS vs. Superior Plus Corp | JD SPORTS vs. NMI Holdings | JD SPORTS vs. SIVERS SEMICONDUCTORS AB | JD SPORTS vs. Talanx AG |
| Mitsui Chemicals vs. SANOK RUBBER ZY | Mitsui Chemicals vs. APPLIED MATERIALS | Mitsui Chemicals vs. Treasury Wine Estates | Mitsui Chemicals vs. Marie Brizard Wine |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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