Correlation Between JD Sports and Zegona Communications
Can any of the company-specific risk be diversified away by investing in both JD Sports and Zegona Communications 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 Zegona Communications 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 Zegona Communications Plc, you can compare the effects of market volatilities on JD Sports and Zegona Communications 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 Zegona Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Zegona Communications.
Diversification Opportunities for JD Sports and Zegona Communications
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between JD Sports and Zegona is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Zegona Communications Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zegona Communications Plc 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 Zegona Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zegona Communications Plc has no effect on the direction of JD Sports i.e., JD Sports and Zegona Communications go up and down completely randomly.
Pair Corralation between JD Sports and Zegona Communications
Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the Zegona Communications. In addition to that, JD Sports is 1.75 times more volatile than Zegona Communications Plc. It trades about -0.14 of its total potential returns per unit of risk. Zegona Communications Plc is currently generating about 0.15 per unit of volatility. If you would invest 30,600 in Zegona Communications Plc on September 12, 2024 and sell it today you would earn a total of 2,400 from holding Zegona Communications Plc or generate 7.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Zegona Communications Plc
Performance |
| Timeline |
| JD Sports Fashion |
| Zegona Communications Plc |
JD Sports and Zegona Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Zegona Communications
The main advantage of trading using opposite JD Sports and Zegona Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Zegona Communications 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 Zegona Communications will offset losses from the drop in Zegona Communications' long position.| JD Sports vs. National Atomic Co | JD Sports vs. OTP Bank Nyrt | JD Sports vs. Samsung Electronics Co | JD Sports vs. Samsung Electronics Co |
| Zegona Communications vs. Catalyst Media Group | Zegona Communications vs. CATLIN GROUP | Zegona Communications vs. Tamburi Investment Partners | Zegona Communications vs. Magnora ASA |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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