Correlation Between JD and Natural Health
Can any of the company-specific risk be diversified away by investing in both JD and Natural Health 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 Natural Health 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 Natural Health Trend, you can compare the effects of market volatilities on JD and Natural Health 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 Natural Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD and Natural Health.
Diversification Opportunities for JD and Natural Health
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between JD and Natural is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding JD Inc Adr and Natural Health Trend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Health Trend 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 Natural Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Health Trend has no effect on the direction of JD i.e., JD and Natural Health go up and down completely randomly.
Pair Corralation between JD and Natural Health
Allowing for the 90-day total investment horizon JD Inc Adr is expected to under-perform the Natural Health. In addition to that, JD is 1.33 times more volatile than Natural Health Trend. It trades about -0.24 of its total potential returns per unit of risk. Natural Health Trend is currently generating about -0.08 per unit of volatility. If you would invest 582.00 in Natural Health Trend on August 28, 2024 and sell it today you would lose (30.00) from holding Natural Health Trend or give up 5.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Inc Adr vs. Natural Health Trend
Performance |
| Timeline |
| JD Inc Adr |
| Natural Health Trend |
JD and Natural Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD and Natural Health
The main advantage of trading using opposite JD and Natural Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD position performs unexpectedly, Natural Health 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 Natural Health will offset losses from the drop in Natural Health's long position.The idea behind JD Inc Adr and Natural Health Trend 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.| Natural Health vs. Inter Parfums | Natural Health vs. European Wax Center | Natural Health vs. Yatsen Holding | Natural Health vs. Edgewell Personal Care |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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