Correlation Between ABERFORTH SMCOS and JD

Can any of the company-specific risk be diversified away by investing in both ABERFORTH SMCOS 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 ABERFORTH SMCOS and JD into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ABERFORTH SMCOS TRLS 01 and JD Inc Adr, you can compare the effects of market volatilities on ABERFORTH SMCOS 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 ABERFORTH SMCOS with a short position of JD. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABERFORTH SMCOS and JD.

Diversification Opportunities for ABERFORTH SMCOS and JD

-0.36

Correlation Coefficient

ABERFORTH SMCOS  JD

Very good diversification

The 3 months correlation between ABERFORTH and JD is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding ABERFORTH SMCOS TRLS 01 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 ABERFORTH SMCOS 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 ABERFORTH SMCOS TRLS 01 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 ABERFORTH SMCOS i.e., ABERFORTH SMCOS and JD go up and down completely randomly.

Pair Corralation between ABERFORTH SMCOS and JD

Assuming the 90 days horizon ABERFORTH SMCOS TRLS 01 is expected to generate 0.34 times more return on investment than JD. However, ABERFORTH SMCOS TRLS 01 is 2.95 times less risky than JD. It trades about 0.05 of its potential returns per unit of risk. JD Inc Adr is currently generating about -0.01 per unit of risk. If you would invest  1,393  in ABERFORTH SMCOS TRLS 01 on September 4, 2024 and sell it today you would earn a total of  347.00  from holding ABERFORTH SMCOS TRLS 01 or generate 24.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

ABERFORTH SMCOS TRLS 01  vs.  JD Inc Adr

ABERFORTH SMCOS TRLS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABERFORTH SMCOS TRLS 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ABERFORTH SMCOS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

JD Inc Adr

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JD Inc Adr are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, JD reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ABERFORTH SMCOS and JD

The main advantage of trading using opposite ABERFORTH SMCOS and JD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABERFORTH SMCOS 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.

The idea behind ABERFORTH SMCOS TRLS 01 and JD Inc Adr pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.