Correlation Between JD SPORTS and SCOTT TECHNOLOGY

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

Diversification Opportunities for JD SPORTS and SCOTT TECHNOLOGY

-0.63

Correlation Coefficient

JD SPORTS  SCOTT TECHNOLOGY

Excellent diversification

The 3 months correlation between 9JD and SCOTT is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding JD SPORTS FASH and SCOTT TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOTT TECHNOLOGY has no effect on the direction of JD SPORTS i.e., JD SPORTS and SCOTT TECHNOLOGY go up and down completely randomly.

Pair Corralation between JD SPORTS and SCOTT TECHNOLOGY

Assuming the 90 days horizon JD SPORTS FASH is expected to generate 0.93 times more return on investment than SCOTT TECHNOLOGY. However, JD SPORTS FASH is 1.07 times less risky than SCOTT TECHNOLOGY. It trades about 0.0 of its potential returns per unit of risk. SCOTT TECHNOLOGY is currently generating about -0.03 per unit of risk. If you would invest  126.00  in JD SPORTS FASH on September 20, 2024 and sell it today you would lose (12.00) from holding JD SPORTS FASH or give up 9.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.48%
Values	Daily Returns

JD SPORTS FASH  vs.  SCOTT TECHNOLOGY

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

SCOTT TECHNOLOGY

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SCOTT TECHNOLOGY are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical indicators, SCOTT TECHNOLOGY may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with JD SPORTS and SCOTT TECHNOLOGY

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

The idea behind JD SPORTS FASH and SCOTT TECHNOLOGY 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 Commodity Directory module to find actively traded commodities issued by global exchanges.