Correlation Between Hilton Food and JD Sports

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Can any of the company-specific risk be diversified away by investing in both Hilton Food 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 Hilton Food and JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hilton Food Group and JD Sports Fashion, you can compare the effects of market volatilities on Hilton Food 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 Hilton Food with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Food and JD Sports.

Diversification Opportunities for Hilton Food and JD Sports

HiltonJD SportsDiversified AwayHiltonJD SportsDiversified Away100%
0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Hilton and JD Sports is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Food Group 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 Hilton Food 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 Hilton Food Group 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 Hilton Food i.e., Hilton Food and JD Sports go up and down completely randomly.

Pair Corralation between Hilton Food and JD Sports

Assuming the 90 days trading horizon Hilton Food Group is expected to generate 0.39 times more return on investment than JD Sports. However, Hilton Food Group is 2.56 times less risky than JD Sports. It trades about -0.05 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.13 per unit of risk. If you would invest  92,300  in Hilton Food Group on November 19, 2024 and sell it today you would lose (4,200) from holding Hilton Food Group or give up 4.55% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Hilton Food Group  vs.  JD Sports Fashion

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -30-25-20-15-10-50
JavaScript chart by amCharts 3.21.15HFG JD
       Timeline  
Hilton Food Group 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Hilton Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Hilton Food is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb840860880900920940
JD Sports Fashion 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days JD Sports Fashion has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb80859095100105

Hilton Food and JD Sports Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.11-1.6-1.09-0.58-0.07870.390.91.411.92 0.050.100.150.200.25
JavaScript chart by amCharts 3.21.15HFG JD
       Returns  

Pair Trading with Hilton Food and JD Sports

The main advantage of trading using opposite Hilton Food and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilton Food 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 Hilton Food Group 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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