Correlation Between JD Sports and Weibo Corp
Can any of the company-specific risk be diversified away by investing in both JD Sports and Weibo Corp 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 Weibo Corp 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 Weibo Corp, you can compare the effects of market volatilities on JD Sports and Weibo Corp 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 Weibo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Weibo Corp.
Diversification Opportunities for JD Sports and Weibo Corp
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between JDDSF and Weibo is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Weibo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weibo Corp 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 Weibo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weibo Corp has no effect on the direction of JD Sports i.e., JD Sports and Weibo Corp go up and down completely randomly.
Pair Corralation between JD Sports and Weibo Corp
Assuming the 90 days horizon JD Sports Fashion is expected to generate 0.89 times more return on investment than Weibo Corp. However, JD Sports Fashion is 1.13 times less risky than Weibo Corp. It trades about -0.04 of its potential returns per unit of risk. Weibo Corp is currently generating about -0.04 per unit of risk. If you would invest 159.00 in JD Sports Fashion on September 3, 2024 and sell it today you would lose (13.00) from holding JD Sports Fashion or give up 8.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Weibo Corp
Performance |
| Timeline |
| JD Sports Fashion |
| Weibo Corp |
JD Sports and Weibo Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Weibo Corp
The main advantage of trading using opposite JD Sports and Weibo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Weibo Corp 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 Weibo Corp will offset losses from the drop in Weibo Corp's long position.| JD Sports vs. Guess Inc | JD Sports vs. Foot Locker | JD Sports vs. JPMorgan Chase Co | JD Sports vs. Home Depot |
| Weibo Corp vs. YY Inc Class | Weibo Corp vs. DouYu International Holdings | Weibo Corp vs. Tencent Music Entertainment | Weibo Corp vs. Autohome |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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