Correlation Between Albemarle and JD Sports

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

By analyzing existing cross correlation between Albemarle and JD Sports Fashion, you can compare the effects of market volatilities on Albemarle and JD Sports 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 Albemarle with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Albemarle and JD Sports.

Diversification Opportunities for Albemarle and JD Sports

0.1

Correlation Coefficient

Albemarle  JD Sports

Average diversification

The 3 months correlation between Albemarle and JDDSF is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Albemarle and JD Sports Fashion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Sports Fashion and Albemarle 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 Albemarle are associated (or correlated) with JD Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Sports Fashion has no effect on the direction of Albemarle i.e., Albemarle and JD Sports go up and down completely randomly.

Pair Corralation between Albemarle and JD Sports

Assuming the 90 days trading horizon Albemarle is expected to under-perform the JD Sports. But the stock apears to be less risky and, when comparing its historical volatility, Albemarle is 1.75 times less risky than JD Sports. The stock trades about -0.01 of its potential returns per unit of risk. The JD Sports Fashion is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  109.00  in JD Sports Fashion on October 24, 2024 and sell it today you would earn a total of  8.00  from holding JD Sports Fashion or generate 7.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	44.62%
Values	Daily Returns

Albemarle  vs.  JD Sports Fashion

Albemarle

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Albemarle are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Albemarle is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

JD Sports Fashion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JD Sports Fashion has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain 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.

Pair Trading with Albemarle and JD Sports

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

The idea behind Albemarle and JD Sports Fashion 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.