Correlation Between JD Sports and Alpha Technology
Can any of the company-specific risk be diversified away by investing in both JD Sports and Alpha Technology 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 Alpha Technology 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 Alpha Technology Group, you can compare the effects of market volatilities on JD Sports and Alpha Technology 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 Alpha Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Alpha Technology.
Diversification Opportunities for JD Sports and Alpha Technology
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between JDSPY and Alpha is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Alpha Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Technology 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 Alpha Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Technology has no effect on the direction of JD Sports i.e., JD Sports and Alpha Technology go up and down completely randomly.
Pair Corralation between JD Sports and Alpha Technology
Assuming the 90 days horizon JD Sports is expected to generate 137.76 times less return on investment than Alpha Technology. But when comparing it to its historical volatility, JD Sports Fashion is 5.94 times less risky than Alpha Technology. It trades about 0.01 of its potential returns per unit of risk. Alpha Technology Group is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,576 in Alpha Technology Group on November 28, 2024 and sell it today you would earn a total of 1,525 from holding Alpha Technology Group or generate 96.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Alpha Technology Group
Performance |
| Timeline |
| JD Sports Fashion |
| Alpha Technology |
JD Sports and Alpha Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Alpha Technology
The main advantage of trading using opposite JD Sports and Alpha Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Alpha Technology 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 Alpha Technology will offset losses from the drop in Alpha Technology's long position.| JD Sports vs. Burlington Stores | JD Sports vs. Childrens Place | JD Sports vs. Buckle Inc | JD Sports vs. Shoe Carnival |
| Alpha Technology vs. Analog Devices | Alpha Technology vs. LAir Liquide SA | Alpha Technology vs. Wizz Air Holdings | Alpha Technology vs. Cebu Air ADR |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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