Correlation Between Insteel Industries and JD SPORTS
Can any of the company-specific risk be diversified away by investing in both Insteel Industries and JD SPORTS 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 Insteel Industries and JD SPORTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insteel Industries and JD SPORTS FASH, you can compare the effects of market volatilities on Insteel Industries and JD SPORTS 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 Insteel Industries with a short position of JD SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insteel Industries and JD SPORTS.
Diversification Opportunities for Insteel Industries and JD SPORTS
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Insteel and 9JD is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries and JD SPORTS FASH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD SPORTS FASH and Insteel Industries 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 Insteel Industries are associated (or correlated) with JD SPORTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD SPORTS FASH has no effect on the direction of Insteel Industries i.e., Insteel Industries and JD SPORTS go up and down completely randomly.
Pair Corralation between Insteel Industries and JD SPORTS
Assuming the 90 days horizon Insteel Industries is expected to generate 0.47 times more return on investment than JD SPORTS. However, Insteel Industries is 2.15 times less risky than JD SPORTS. It trades about 0.27 of its potential returns per unit of risk. JD SPORTS FASH is currently generating about -0.08 per unit of risk. If you would invest 2,500 in Insteel Industries on November 6, 2024 and sell it today you would earn a total of 280.00 from holding Insteel Industries or generate 11.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Insteel Industries vs. JD SPORTS FASH
Performance |
| Timeline |
| Insteel Industries |
| JD SPORTS FASH |
Insteel Industries and JD SPORTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insteel Industries and JD SPORTS
The main advantage of trading using opposite Insteel Industries and JD SPORTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insteel Industries position performs unexpectedly, JD SPORTS 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 SPORTS will offset losses from the drop in JD SPORTS's long position.| Insteel Industries vs. Siamgas And Petrochemicals | Insteel Industries vs. KINGBOARD CHEMICAL | Insteel Industries vs. INDO RAMA SYNTHETIC | Insteel Industries vs. TIANDE CHEMICAL |
| JD SPORTS vs. Eurasia Mining Plc | JD SPORTS vs. Endeavour Mining PLC | JD SPORTS vs. MUTUIONLINE | JD SPORTS vs. Yanzhou Coal Mining |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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