Correlation Between JD SPORTS and CELLULAR GOODS

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

By analyzing existing cross correlation between JD SPORTS FASH and CELLULAR GOODS LS, you can compare the effects of market volatilities on JD SPORTS and CELLULAR GOODS 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 CELLULAR GOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD SPORTS and CELLULAR GOODS.

Diversification Opportunities for JD SPORTS and CELLULAR GOODS

0.0

Correlation Coefficient

JD SPORTS  CELLULAR GOODS

Pay attention - limited upside

The 3 months correlation between 9JD and CELLULAR is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding JD SPORTS FASH and CELLULAR GOODS LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CELLULAR GOODS LS 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 FASH are associated (or correlated) with CELLULAR GOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CELLULAR GOODS LS has no effect on the direction of JD SPORTS i.e., JD SPORTS and CELLULAR GOODS go up and down completely randomly.

Pair Corralation between JD SPORTS and CELLULAR GOODS

Assuming the 90 days horizon JD SPORTS FASH is expected to under-perform the CELLULAR GOODS. But the stock apears to be less risky and, when comparing its historical volatility, JD SPORTS FASH is 4.75 times less risky than CELLULAR GOODS. The stock trades about -0.18 of its potential returns per unit of risk. The CELLULAR GOODS LS is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  0.05  in CELLULAR GOODS LS on October 6, 2024 and sell it today you would earn a total of  0.05  from holding CELLULAR GOODS LS or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

JD SPORTS FASH  vs.  CELLULAR GOODS LS

JD SPORTS FASH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JD SPORTS FASH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

CELLULAR GOODS LS

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with JD SPORTS and CELLULAR GOODS

The main advantage of trading using opposite JD SPORTS and CELLULAR GOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD SPORTS position performs unexpectedly, CELLULAR GOODS 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 CELLULAR GOODS will offset losses from the drop in CELLULAR GOODS's long position.

The idea behind JD SPORTS FASH and CELLULAR GOODS LS 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.