Correlation Between JD Sports and Maanshan Iron
Can any of the company-specific risk be diversified away by investing in both JD Sports and Maanshan Iron 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 Maanshan Iron 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 Maanshan Iron Steel, you can compare the effects of market volatilities on JD Sports and Maanshan Iron 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 Maanshan Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Maanshan Iron.
Diversification Opportunities for JD Sports and Maanshan Iron
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between JDDSF and Maanshan is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Maanshan Iron Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maanshan Iron Steel 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 Maanshan Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maanshan Iron Steel has no effect on the direction of JD Sports i.e., JD Sports and Maanshan Iron go up and down completely randomly.
Pair Corralation between JD Sports and Maanshan Iron
Assuming the 90 days horizon JD Sports Fashion is expected to generate 1.2 times more return on investment than Maanshan Iron. However, JD Sports is 1.2 times more volatile than Maanshan Iron Steel. It trades about 0.03 of its potential returns per unit of risk. Maanshan Iron Steel is currently generating about -0.01 per unit of risk. If you would invest 109.00 in JD Sports Fashion on September 3, 2024 and sell it today you would earn a total of 37.00 from holding JD Sports Fashion or generate 33.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Maanshan Iron Steel
Performance |
| Timeline |
| JD Sports Fashion |
| Maanshan Iron Steel |
JD Sports and Maanshan Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Maanshan Iron
The main advantage of trading using opposite JD Sports and Maanshan Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Maanshan Iron 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 Maanshan Iron will offset losses from the drop in Maanshan Iron's long position.| JD Sports vs. Guess Inc | JD Sports vs. Foot Locker | JD Sports vs. JPMorgan Chase Co | JD Sports vs. Home Depot |
| Maanshan Iron vs. Ta Chen Stainless | Maanshan Iron vs. Gerdau SA | Maanshan Iron vs. Gerdau SA | Maanshan Iron vs. Nucor Corp |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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