Correlation Between JD Sports and Hafnia
Can any of the company-specific risk be diversified away by investing in both JD Sports and Hafnia 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 Sports and Hafnia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JD Sports Fashion and Hafnia Limited, you can compare the effects of market volatilities on JD Sports and Hafnia 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 Sports with a short position of Hafnia. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Hafnia.
Diversification Opportunities for JD Sports and Hafnia
Good diversification
The 3 months correlation between JDDSF and Hafnia is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Hafnia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hafnia Limited and JD Sports 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 Sports Fashion are associated (or correlated) with Hafnia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hafnia Limited has no effect on the direction of JD Sports i.e., JD Sports and Hafnia go up and down completely randomly.
Pair Corralation between JD Sports and Hafnia
Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the Hafnia. In addition to that, JD Sports is 1.53 times more volatile than Hafnia Limited. It trades about -0.22 of its total potential returns per unit of risk. Hafnia Limited is currently generating about 0.18 per unit of volatility. If you would invest 499.00 in Hafnia Limited on September 12, 2024 and sell it today you would earn a total of 47.00 from holding Hafnia Limited or generate 9.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
JD Sports Fashion vs. Hafnia Limited
Performance |
| Timeline |
| JD Sports Fashion |
| Hafnia Limited |
JD Sports and Hafnia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Hafnia
The main advantage of trading using opposite JD Sports and Hafnia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Hafnia 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 Hafnia will offset losses from the drop in Hafnia's long position.| JD Sports vs. Burlington Stores | JD Sports vs. Childrens Place | JD Sports vs. Buckle Inc | JD Sports vs. Shoe Carnival |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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