Correlation Between NEL ASA and JD

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

By analyzing existing cross correlation between NEL ASA ADR30 and JD Inc Adr, you can compare the effects of market volatilities on NEL ASA 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 NEL ASA with a short position of JD. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEL ASA and JD.

Diversification Opportunities for NEL ASA and JD

-0.59

Correlation Coefficient

NEL ASA  JD

Excellent diversification

The 3 months correlation between NEL and JD is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding NEL ASA ADR30 and JD Inc Adr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Inc Adr and NEL ASA 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 NEL ASA ADR30 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 Adr has no effect on the direction of NEL ASA i.e., NEL ASA and JD go up and down completely randomly.

Pair Corralation between NEL ASA and JD

Assuming the 90 days trading horizon NEL ASA ADR30 is expected to under-perform the JD. In addition to that, NEL ASA is 1.31 times more volatile than JD Inc Adr. It trades about -0.16 of its total potential returns per unit of risk. JD Inc Adr is currently generating about 0.16 per unit of volatility. If you would invest  2,425  in JD Inc Adr on September 1, 2024 and sell it today you would earn a total of  1,110  from holding JD Inc Adr or generate 45.77% return on investment over 90 days.

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

NEL ASA ADR30  vs.  JD Inc Adr

NEL ASA ADR30

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NEL ASA ADR30 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 technical and fundamental indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

JD Inc Adr

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JD Inc Adr are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, JD reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NEL ASA and JD

The main advantage of trading using opposite NEL ASA and JD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEL ASA 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 NEL ASA ADR30 and JD Inc Adr 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.