Correlation Between JD and Farfetch
Can any of the company-specific risk be diversified away by investing in both JD and Farfetch 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 and Farfetch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JD Inc Adr and Farfetch Ltd Class, you can compare the effects of market volatilities on JD and Farfetch 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 with a short position of Farfetch. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD and Farfetch.
Diversification Opportunities for JD and Farfetch
Poor diversification
The 3 months correlation between JD and Farfetch is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding JD Inc Adr and Farfetch Ltd Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farfetch Class and JD 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 Inc Adr are associated (or correlated) with Farfetch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farfetch Class has no effect on the direction of JD i.e., JD and Farfetch go up and down completely randomly.
Pair Corralation between JD and Farfetch
If you would invest 537.00 in Farfetch Ltd Class on August 24, 2024 and sell it today you would earn a total of 0.00 from holding Farfetch Ltd Class or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.35% |
| Values | Daily Returns |
JD Inc Adr vs. Farfetch Ltd Class
Performance |
| Timeline |
| JD Inc Adr |
| Farfetch Class |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
JD and Farfetch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD and Farfetch
The main advantage of trading using opposite JD and Farfetch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD position performs unexpectedly, Farfetch 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 Farfetch will offset losses from the drop in Farfetch's long position.The idea behind JD Inc Adr and Farfetch Ltd Class 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.| Farfetch vs. JD Inc Adr | Farfetch vs. Alibaba Group Holding | Farfetch vs. Sea | Farfetch vs. Vipshop Holdings Limited |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |