Correlation Between JD and Wearable Devices
Can any of the company-specific risk be diversified away by investing in both JD and Wearable Devices 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 Wearable Devices 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 Wearable Devices, you can compare the effects of market volatilities on JD and Wearable Devices 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 Wearable Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD and Wearable Devices.
Diversification Opportunities for JD and Wearable Devices
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between JD and Wearable is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding JD Inc Adr and Wearable Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wearable Devices 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 Wearable Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wearable Devices has no effect on the direction of JD i.e., JD and Wearable Devices go up and down completely randomly.
Pair Corralation between JD and Wearable Devices
Allowing for the 90-day total investment horizon JD Inc Adr is expected to generate 0.26 times more return on investment than Wearable Devices. However, JD Inc Adr is 3.84 times less risky than Wearable Devices. It trades about -0.11 of its potential returns per unit of risk. Wearable Devices is currently generating about -0.04 per unit of risk. If you would invest 4,114 in JD Inc Adr on August 30, 2024 and sell it today you would lose (395.00) from holding JD Inc Adr or give up 9.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
JD Inc Adr vs. Wearable Devices
Performance |
| Timeline |
| JD Inc Adr |
| Wearable Devices |
JD and Wearable Devices Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD and Wearable Devices
The main advantage of trading using opposite JD and Wearable Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD position performs unexpectedly, Wearable Devices 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 Wearable Devices will offset losses from the drop in Wearable Devices' long position.The idea behind JD Inc Adr and Wearable Devices 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.| Wearable Devices vs. Koss Corporation | Wearable Devices vs. Wearable Devices | Wearable Devices vs. Sonos Inc | Wearable Devices vs. LG Display Co |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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