Correlation Between MEITUAN UNSPADR/2B and JD

Can any of the company-specific risk be diversified away by investing in both MEITUAN UNSPADR/2B 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 MEITUAN UNSPADR/2B and JD into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MEITUAN UNSPADR2B and JD Inc, you can compare the effects of market volatilities on MEITUAN UNSPADR/2B 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 MEITUAN UNSPADR/2B with a short position of JD. Check out your portfolio center. Please also check ongoing floating volatility patterns of MEITUAN UNSPADR/2B and JD.

Diversification Opportunities for MEITUAN UNSPADR/2B and JD

0.57

Correlation Coefficient

MEITUAN UNSPADR/2B  JD

Very weak diversification

The 3 months correlation between MEITUAN and JD is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding MEITUAN UNSPADR2B and JD Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Inc and MEITUAN UNSPADR/2B 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 MEITUAN UNSPADR2B 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 has no effect on the direction of MEITUAN UNSPADR/2B i.e., MEITUAN UNSPADR/2B and JD go up and down completely randomly.

Pair Corralation between MEITUAN UNSPADR/2B and JD

Assuming the 90 days trading horizon MEITUAN UNSPADR/2B is expected to generate 2.73 times less return on investment than JD. In addition to that, MEITUAN UNSPADR/2B is 1.08 times more volatile than JD Inc. It trades about 0.03 of its total potential returns per unit of risk. JD Inc is currently generating about 0.09 per unit of volatility. If you would invest  1,664  in JD Inc on December 29, 2024 and sell it today you would earn a total of  302.00  from holding JD Inc or generate 18.15% return on investment over 90 days.

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

MEITUAN UNSPADR2B  vs.  JD Inc

MEITUAN UNSPADR/2B

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MEITUAN UNSPADR2B are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, MEITUAN UNSPADR/2B may actually be approaching a critical reversion point that can send shares even higher in April 2025.

JD Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JD Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, JD reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MEITUAN UNSPADR/2B and JD

The main advantage of trading using opposite MEITUAN UNSPADR/2B and JD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MEITUAN UNSPADR/2B 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 MEITUAN UNSPADR2B and JD Inc 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.