Correlation Between Weibo Corp and JD Sports
Can any of the company-specific risk be diversified away by investing in both Weibo Corp 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 Weibo Corp and JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weibo Corp and JD Sports Fashion, you can compare the effects of market volatilities on Weibo Corp 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 Weibo Corp with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weibo Corp and JD Sports.
Diversification Opportunities for Weibo Corp and JD Sports
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Weibo and JDDSF is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and JD Sports Fashion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Sports Fashion and Weibo Corp 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 Weibo Corp 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 Fashion has no effect on the direction of Weibo Corp i.e., Weibo Corp and JD Sports go up and down completely randomly.
Pair Corralation between Weibo Corp and JD Sports
Allowing for the 90-day total investment horizon Weibo Corp is expected to generate 2.35 times less return on investment than JD Sports. In addition to that, Weibo Corp is 1.38 times more volatile than JD Sports Fashion. It trades about 0.01 of its total potential returns per unit of risk. JD Sports Fashion is currently generating about 0.03 per unit of volatility. If you would invest 139.00 in JD Sports Fashion on September 3, 2024 and sell it today you would earn a total of 7.00 from holding JD Sports Fashion or generate 5.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weibo Corp vs. JD Sports Fashion
Performance |
| Timeline |
| Weibo Corp |
| JD Sports Fashion |
Weibo Corp and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weibo Corp and JD Sports
The main advantage of trading using opposite Weibo Corp and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weibo Corp 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' long position.| Weibo Corp vs. YY Inc Class | Weibo Corp vs. DouYu International Holdings | Weibo Corp vs. Tencent Music Entertainment | Weibo Corp vs. Autohome |
| JD Sports vs. Guess Inc | JD Sports vs. Foot Locker | JD Sports vs. JPMorgan Chase Co | JD Sports vs. Home Depot |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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