Correlation Between JD SPORTS and ALERION CLEANPOWER

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

Diversification Opportunities for JD SPORTS and ALERION CLEANPOWER

-0.51

Correlation Coefficient

JD SPORTS  ALERION CLEANPOWER

Excellent diversification

The 3 months correlation between 9JD and ALERION is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding JD SPORTS FASH and ALERION CLEANPOWER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALERION CLEANPOWER 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 ALERION CLEANPOWER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALERION CLEANPOWER has no effect on the direction of JD SPORTS i.e., JD SPORTS and ALERION CLEANPOWER go up and down completely randomly.

Pair Corralation between JD SPORTS and ALERION CLEANPOWER

Assuming the 90 days horizon JD SPORTS FASH is expected to under-perform the ALERION CLEANPOWER. In addition to that, JD SPORTS is 1.09 times more volatile than ALERION CLEANPOWER. It trades about -0.17 of its total potential returns per unit of risk. ALERION CLEANPOWER is currently generating about 0.04 per unit of volatility. If you would invest  1,558  in ALERION CLEANPOWER on October 10, 2024 and sell it today you would earn a total of  72.00  from holding ALERION CLEANPOWER or generate 4.62% return on investment over 90 days.

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

JD SPORTS FASH  vs.  ALERION CLEANPOWER

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 unsteady 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.

ALERION CLEANPOWER

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ALERION CLEANPOWER are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ALERION CLEANPOWER may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with JD SPORTS and ALERION CLEANPOWER

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

The idea behind JD SPORTS FASH and ALERION CLEANPOWER 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.