Correlation Between JD SPORTS and Liaoning Port

Can any of the company-specific risk be diversified away by investing in both JD SPORTS and Liaoning Port 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 Liaoning Port 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 Liaoning Port CoLtd, you can compare the effects of market volatilities on JD SPORTS and Liaoning Port 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 Liaoning Port. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD SPORTS and Liaoning Port.

Diversification Opportunities for JD SPORTS and Liaoning Port

0.35

Correlation Coefficient

JD SPORTS  Liaoning Port

Weak diversification

The 3 months correlation between 9JD and Liaoning is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding JD SPORTS FASH and Liaoning Port CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liaoning Port CoLtd 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 Liaoning Port. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liaoning Port CoLtd has no effect on the direction of JD SPORTS i.e., JD SPORTS and Liaoning Port go up and down completely randomly.

Pair Corralation between JD SPORTS and Liaoning Port

Assuming the 90 days horizon JD SPORTS FASH is expected to under-perform the Liaoning Port. In addition to that, JD SPORTS is 1.79 times more volatile than Liaoning Port CoLtd. It trades about -0.28 of its total potential returns per unit of risk. Liaoning Port CoLtd is currently generating about -0.02 per unit of volatility. If you would invest  7.70  in Liaoning Port CoLtd on December 4, 2024 and sell it today you would lose (0.05) from holding Liaoning Port CoLtd or give up 0.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

JD SPORTS FASH  vs.  Liaoning Port CoLtd

JD SPORTS FASH

Risk-Adjusted Performance

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 April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Liaoning Port CoLtd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Liaoning Port CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with JD SPORTS and Liaoning Port

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

The idea behind JD SPORTS FASH and Liaoning Port CoLtd 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.