Correlation Between JD and Companhia
Can any of the company-specific risk be diversified away by investing in both JD and Companhia 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 Companhia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JD Inc and Companhia de Saneamento, you can compare the effects of market volatilities on JD and Companhia 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 Companhia. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD and Companhia.
Diversification Opportunities for JD and Companhia
Excellent diversification
The 3 months correlation between JD and Companhia is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding JD Inc and Companhia de Saneamento in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia de Saneamento 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 Companhia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia de Saneamento has no effect on the direction of JD i.e., JD and Companhia go up and down completely randomly.
Pair Corralation between JD and Companhia
Assuming the 90 days trading horizon JD is expected to generate 1.19 times less return on investment than Companhia. In addition to that, JD is 1.93 times more volatile than Companhia de Saneamento. It trades about 0.03 of its total potential returns per unit of risk. Companhia de Saneamento is currently generating about 0.08 per unit of volatility. If you would invest 357.00 in Companhia de Saneamento on August 30, 2024 and sell it today you would earn a total of 204.00 from holding Companhia de Saneamento or generate 57.14% 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. Companhia de Saneamento
Performance |
| Timeline |
| JD Inc |
| Companhia de Saneamento |
JD and Companhia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD and Companhia
The main advantage of trading using opposite JD and Companhia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD position performs unexpectedly, Companhia 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 Companhia will offset losses from the drop in Companhia's long position.| JD vs. Cognizant Technology Solutions | JD vs. Metalurgica Gerdau SA | JD vs. MAHLE Metal Leve | JD vs. Brpr Corporate Offices |
| Companhia vs. CTEEP Companhia | Companhia vs. BB Seguridade Participacoes | Companhia vs. Transmissora Aliana de | Companhia vs. Itasa Investimentos |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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