Correlation Between JD Food and Carabao Group
Can any of the company-specific risk be diversified away by investing in both JD Food and Carabao Group 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 Food and Carabao Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JD Food PCL and Carabao Group Public, you can compare the effects of market volatilities on JD Food and Carabao Group 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 Food with a short position of Carabao Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Food and Carabao Group.
Diversification Opportunities for JD Food and Carabao Group
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between JDF and Carabao is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding JD Food PCL and Carabao Group Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carabao Group Public and JD Food 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 Food PCL are associated (or correlated) with Carabao Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carabao Group Public has no effect on the direction of JD Food i.e., JD Food and Carabao Group go up and down completely randomly.
Pair Corralation between JD Food and Carabao Group
Assuming the 90 days trading horizon JD Food PCL is expected to generate 0.85 times more return on investment than Carabao Group. However, JD Food PCL is 1.18 times less risky than Carabao Group. It trades about 0.06 of its potential returns per unit of risk. Carabao Group Public is currently generating about -0.07 per unit of risk. If you would invest 200.00 in JD Food PCL on September 1, 2024 and sell it today you would earn a total of 4.00 from holding JD Food PCL or generate 2.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Food PCL vs. Carabao Group Public
Performance |
| Timeline |
| JD Food PCL |
| Carabao Group Public |
JD Food and Carabao Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Food and Carabao Group
The main advantage of trading using opposite JD Food and Carabao Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Food position performs unexpectedly, Carabao Group 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 Carabao Group will offset losses from the drop in Carabao Group's long position.| JD Food vs. Mega Lifesciences Public | JD Food vs. Com7 PCL | JD Food vs. Thai Union Group | JD Food vs. Jay Mart Public |
| Carabao Group vs. CP ALL Public | Carabao Group vs. Minor International Public | Carabao Group vs. Srisawad Power 1979 | Carabao Group vs. Home Product Center |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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