Correlation Between JD and Ouro Fino
Can any of the company-specific risk be diversified away by investing in both JD and Ouro Fino 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 Ouro Fino into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JD Inc and Ouro Fino Sade, you can compare the effects of market volatilities on JD and Ouro Fino 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 Ouro Fino. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD and Ouro Fino.
Diversification Opportunities for JD and Ouro Fino
Excellent diversification
The 3 months correlation between JD and Ouro is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding JD Inc and Ouro Fino Sade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ouro Fino Sade 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 are associated (or correlated) with Ouro Fino. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ouro Fino Sade has no effect on the direction of JD i.e., JD and Ouro Fino go up and down completely randomly.
Pair Corralation between JD and Ouro Fino
Assuming the 90 days trading horizon JD Inc is expected to generate 2.04 times more return on investment than Ouro Fino. However, JD is 2.04 times more volatile than Ouro Fino Sade. It trades about 0.08 of its potential returns per unit of risk. Ouro Fino Sade is currently generating about 0.04 per unit of risk. If you would invest 2,600 in JD Inc on August 29, 2024 and sell it today you would earn a total of 835.00 from holding JD Inc or generate 32.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Inc vs. Ouro Fino Sade
Performance |
| Timeline |
| JD Inc |
| Ouro Fino Sade |
JD and Ouro Fino Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD and Ouro Fino
The main advantage of trading using opposite JD and Ouro Fino positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD position performs unexpectedly, Ouro Fino 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 Ouro Fino will offset losses from the drop in Ouro Fino's long position.The idea behind JD Inc and Ouro Fino Sade 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.| Ouro Fino vs. Engie Brasil Energia | Ouro Fino vs. WEG SA | Ouro Fino vs. Ambev SA | Ouro Fino vs. M Dias Branco |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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