Correlation Between JD Food and SCB X
Can any of the company-specific risk be diversified away by investing in both JD Food and SCB X 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 SCB X 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 SCB X Public, you can compare the effects of market volatilities on JD Food and SCB X 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 SCB X. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Food and SCB X.
Diversification Opportunities for JD Food and SCB X
Excellent diversification
The 3 months correlation between JDF and SCB is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding JD Food PCL and SCB X Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCB X 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 SCB X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCB X Public has no effect on the direction of JD Food i.e., JD Food and SCB X go up and down completely randomly.
Pair Corralation between JD Food and SCB X
Assuming the 90 days trading horizon JD Food PCL is expected to under-perform the SCB X. But the stock apears to be less risky and, when comparing its historical volatility, JD Food PCL is 1.36 times less risky than SCB X. The stock trades about -0.16 of its potential returns per unit of risk. The SCB X Public is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 11,800 in SCB X Public on November 5, 2024 and sell it today you would earn a total of 700.00 from holding SCB X Public or generate 5.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Food PCL vs. SCB X Public
Performance |
| Timeline |
| JD Food PCL |
| SCB X Public |
JD Food and SCB X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Food and SCB X
The main advantage of trading using opposite JD Food and SCB X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Food position performs unexpectedly, SCB X 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 SCB X will offset losses from the drop in SCB X's long position.| JD Food vs. Osotspa Public | JD Food vs. Thai Union Group | JD Food vs. Carabao Group Public | JD Food vs. PTG Energy PCL |
| SCB X vs. Communication System Solution | SCB X vs. Fine Metal Technologies | SCB X vs. Mena Transport Public | SCB X vs. Digital Telecommunications Infrastructure |
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 Stocks Directory module to find actively traded stocks across global markets.
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