Correlation Between Natural Health and JD
Can any of the company-specific risk be diversified away by investing in both Natural Health and JD 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 Natural Health and JD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natural Health Trend and JD Inc Adr, you can compare the effects of market volatilities on Natural Health and JD 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 Natural Health with a short position of JD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Health and JD.
Diversification Opportunities for Natural Health and JD
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Natural and JD is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Natural Health Trend and JD Inc Adr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Inc Adr and Natural Health 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 Natural Health Trend are associated (or correlated) with JD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Inc Adr has no effect on the direction of Natural Health i.e., Natural Health and JD go up and down completely randomly.
Pair Corralation between Natural Health and JD
Given the investment horizon of 90 days Natural Health is expected to generate 4.34 times less return on investment than JD. But when comparing it to its historical volatility, Natural Health Trend is 1.62 times less risky than JD. It trades about 0.02 of its potential returns per unit of risk. JD Inc Adr is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,473 in JD Inc Adr on October 25, 2024 and sell it today you would earn a total of 1,396 from holding JD Inc Adr or generate 56.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Natural Health Trend vs. JD Inc Adr
Performance |
| Timeline |
| Natural Health Trend |
| JD Inc Adr |
Natural Health and JD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natural Health and JD
The main advantage of trading using opposite Natural Health and JD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Health position performs unexpectedly, JD 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 JD will offset losses from the drop in JD's long position.| Natural Health vs. Liquidity Services | Natural Health vs. Hour Loop | Natural Health vs. Qurate Retail Series | Natural Health vs. Emerge Commerce |
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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