Correlation Between CHIBA BANK and JD
Can any of the company-specific risk be diversified away by investing in both CHIBA BANK and JD 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 CHIBA BANK and JD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHIBA BANK and JD Inc, you can compare the effects of market volatilities on CHIBA BANK and JD 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 CHIBA BANK with a short position of JD. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHIBA BANK and JD.
Diversification Opportunities for CHIBA BANK and JD
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between CHIBA and JD is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding CHIBA BANK and JD Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Inc and CHIBA BANK 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 CHIBA BANK are associated (or correlated) with JD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Inc has no effect on the direction of CHIBA BANK i.e., CHIBA BANK and JD go up and down completely randomly.
Pair Corralation between CHIBA BANK and JD
Assuming the 90 days trading horizon CHIBA BANK is expected to generate 1.08 times less return on investment than JD. But when comparing it to its historical volatility, CHIBA BANK is 1.81 times less risky than JD. It trades about 0.22 of its potential returns per unit of risk. JD Inc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,715 in JD Inc on September 13, 2024 and sell it today you would earn a total of 152.00 from holding JD Inc or generate 8.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHIBA BANK vs. JD Inc
Performance |
| Timeline |
| CHIBA BANK |
| JD Inc |
CHIBA BANK and JD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHIBA BANK and JD
The main advantage of trading using opposite CHIBA BANK and JD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHIBA BANK position performs unexpectedly, JD 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 will offset losses from the drop in JD's long position.The idea behind CHIBA BANK and JD Inc 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.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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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