Correlation Between JD Sports and PPHE Hotel
Can any of the company-specific risk be diversified away by investing in both JD Sports and PPHE Hotel 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 PPHE Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JD Sports Fashion and PPHE Hotel Group, you can compare the effects of market volatilities on JD Sports and PPHE Hotel 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 PPHE Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and PPHE Hotel.
Diversification Opportunities for JD Sports and PPHE Hotel
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between JD Sports and PPHE is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and PPHE Hotel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPHE Hotel Group 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 Fashion are associated (or correlated) with PPHE Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPHE Hotel Group has no effect on the direction of JD Sports i.e., JD Sports and PPHE Hotel go up and down completely randomly.
Pair Corralation between JD Sports and PPHE Hotel
Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the PPHE Hotel. But the stock apears to be less risky and, when comparing its historical volatility, JD Sports Fashion is 1.59 times less risky than PPHE Hotel. The stock trades about -0.31 of its potential returns per unit of risk. The PPHE Hotel Group is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 118,500 in PPHE Hotel Group on September 24, 2024 and sell it today you would earn a total of 18,000 from holding PPHE Hotel Group or generate 15.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
JD Sports Fashion vs. PPHE Hotel Group
Performance |
| Timeline |
| JD Sports Fashion |
| PPHE Hotel Group |
JD Sports and PPHE Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and PPHE Hotel
The main advantage of trading using opposite JD Sports and PPHE Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, PPHE Hotel 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 PPHE Hotel will offset losses from the drop in PPHE Hotel's long position.| JD Sports vs. Samsung Electronics Co | JD Sports vs. Samsung Electronics Co | JD Sports vs. Hyundai Motor | JD Sports vs. Toyota Motor Corp |
| PPHE Hotel vs. National Atomic Co | PPHE Hotel vs. Flutter Entertainment PLC | PPHE Hotel vs. Camellia Plc | PPHE Hotel vs. Marwyn Value Investors |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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