Correlation Between JAPAN AIRLINES and JD SPORTS
Can any of the company-specific risk be diversified away by investing in both JAPAN AIRLINES 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 JAPAN AIRLINES and JD SPORTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JAPAN AIRLINES and JD SPORTS FASH, you can compare the effects of market volatilities on JAPAN AIRLINES 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 JAPAN AIRLINES with a short position of JD SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN AIRLINES and JD SPORTS.
Diversification Opportunities for JAPAN AIRLINES and JD SPORTS
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between JAPAN and 9JD is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN AIRLINES 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 JAPAN AIRLINES 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 JAPAN AIRLINES 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 JAPAN AIRLINES i.e., JAPAN AIRLINES and JD SPORTS go up and down completely randomly.
Pair Corralation between JAPAN AIRLINES and JD SPORTS
Assuming the 90 days trading horizon JAPAN AIRLINES is expected to generate 0.41 times more return on investment than JD SPORTS. However, JAPAN AIRLINES is 2.45 times less risky than JD SPORTS. It trades about 0.01 of its potential returns per unit of risk. JD SPORTS FASH is currently generating about -0.13 per unit of risk. If you would invest 1,520 in JAPAN AIRLINES on August 30, 2024 and sell it today you would earn a total of 10.00 from holding JAPAN AIRLINES or generate 0.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JAPAN AIRLINES vs. JD SPORTS FASH
Performance |
| Timeline |
| JAPAN AIRLINES |
| JD SPORTS FASH |
JAPAN AIRLINES and JD SPORTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JAPAN AIRLINES and JD SPORTS
The main advantage of trading using opposite JAPAN AIRLINES and JD SPORTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN AIRLINES 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.| JAPAN AIRLINES vs. SIVERS SEMICONDUCTORS AB | JAPAN AIRLINES vs. Darden Restaurants | JAPAN AIRLINES vs. Reliance Steel Aluminum | JAPAN AIRLINES vs. Q2M Managementberatung AG |
| JD SPORTS vs. FAST RETAIL ADR | JD SPORTS vs. AOYAMA TRADING | JD SPORTS vs. Global Fashion Group | JD SPORTS vs. Superior Plus Corp |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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