Correlation Between JD Food and Platinum
Can any of the company-specific risk be diversified away by investing in both JD Food and Platinum 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 Platinum 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 The Platinum Group, you can compare the effects of market volatilities on JD Food and Platinum 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 Platinum. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Food and Platinum.
Diversification Opportunities for JD Food and Platinum
Good diversification
The 3 months correlation between JDF and Platinum is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding JD Food PCL and The Platinum Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Group 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 Platinum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Group has no effect on the direction of JD Food i.e., JD Food and Platinum go up and down completely randomly.
Pair Corralation between JD Food and Platinum
Assuming the 90 days trading horizon JD Food PCL is expected to under-perform the Platinum. But the stock apears to be less risky and, when comparing its historical volatility, JD Food PCL is 22.8 times less risky than Platinum. The stock trades about -0.01 of its potential returns per unit of risk. The The Platinum Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 350.00 in The Platinum Group on August 31, 2024 and sell it today you would lose (118.00) from holding The Platinum Group or give up 33.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.74% |
| Values | Daily Returns |
JD Food PCL vs. The Platinum Group
Performance |
| Timeline |
| JD Food PCL |
| Platinum Group |
JD Food and Platinum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Food and Platinum
The main advantage of trading using opposite JD Food and Platinum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Food position performs unexpectedly, Platinum 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 Platinum will offset losses from the drop in Platinum'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 |
| Platinum vs. TRV Rubber Products | Platinum vs. Porn Prom Metal | Platinum vs. JD Food PCL | Platinum vs. PTT OIL RETAIL |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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