Correlation Between CeoTronics and JD

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

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

Diversification Opportunities for CeoTronics and JD

-0.08

Correlation Coefficient

CeoTronics  JD

Good diversification

The 3 months correlation between CeoTronics and JD is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding CeoTronics AG and JD Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Inc and CeoTronics 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 CeoTronics AG 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 CeoTronics i.e., CeoTronics and JD go up and down completely randomly.

Pair Corralation between CeoTronics and JD

Assuming the 90 days trading horizon CeoTronics AG is expected to generate 0.71 times more return on investment than JD. However, CeoTronics AG is 1.4 times less risky than JD. It trades about 0.04 of its potential returns per unit of risk. JD Inc is currently generating about -0.01 per unit of risk. If you would invest  428.00  in CeoTronics AG on October 9, 2024 and sell it today you would earn a total of  162.00  from holding CeoTronics AG or generate 37.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.81%
Values	Daily Returns

CeoTronics AG  vs.  JD Inc

CeoTronics AG

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CeoTronics AG are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward-looking signals, CeoTronics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

JD Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JD Inc 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 CeoTronics and JD

The main advantage of trading using opposite CeoTronics and JD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CeoTronics 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 CeoTronics AG 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.