Correlation Between Nippon Steel and JD SPORTS
Can any of the company-specific risk be diversified away by investing in both Nippon Steel and JD SPORTS 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 Nippon Steel and JD SPORTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nippon Steel and JD SPORTS FASH, you can compare the effects of market volatilities on Nippon Steel and JD SPORTS 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 Nippon Steel with a short position of JD SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nippon Steel and JD SPORTS.
Diversification Opportunities for Nippon Steel and JD SPORTS
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nippon and 9JD is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Nippon Steel and JD SPORTS FASH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD SPORTS FASH and Nippon Steel 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 Nippon Steel are associated (or correlated) with JD SPORTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD SPORTS FASH has no effect on the direction of Nippon Steel i.e., Nippon Steel and JD SPORTS go up and down completely randomly.
Pair Corralation between Nippon Steel and JD SPORTS
Assuming the 90 days trading horizon Nippon Steel is expected to generate 0.55 times more return on investment than JD SPORTS. However, Nippon Steel is 1.83 times less risky than JD SPORTS. It trades about -0.04 of its potential returns per unit of risk. JD SPORTS FASH is currently generating about -0.13 per unit of risk. If you would invest 2,007 in Nippon Steel on August 31, 2024 and sell it today you would lose (106.00) from holding Nippon Steel or give up 5.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nippon Steel vs. JD SPORTS FASH
Performance |
| Timeline |
| Nippon Steel |
| JD SPORTS FASH |
Nippon Steel and JD SPORTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nippon Steel and JD SPORTS
The main advantage of trading using opposite Nippon Steel and JD SPORTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nippon Steel position performs unexpectedly, JD SPORTS 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 SPORTS will offset losses from the drop in JD SPORTS's long position.| Nippon Steel vs. SIVERS SEMICONDUCTORS AB | Nippon Steel vs. Darden Restaurants | Nippon Steel vs. Reliance Steel Aluminum | Nippon Steel vs. Q2M Managementberatung AG |
| JD SPORTS vs. FAST RETAIL ADR | JD SPORTS vs. AOYAMA TRADING | JD SPORTS vs. Global Fashion Group | JD SPORTS vs. Superior Plus Corp |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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