Correlation Between JD Sports and Octopus Aim

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

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

Diversification Opportunities for JD Sports and Octopus Aim

0.31

Correlation Coefficient

JD Sports  Octopus Aim

Weak diversification

The 3 months correlation between JD Sports and Octopus is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Octopus Aim Vct in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Octopus Aim Vct and JD Sports 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 JD Sports Fashion are associated (or correlated) with Octopus Aim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Octopus Aim Vct has no effect on the direction of JD Sports i.e., JD Sports and Octopus Aim go up and down completely randomly.

Pair Corralation between JD Sports and Octopus Aim

Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the Octopus Aim. In addition to that, JD Sports is 5.71 times more volatile than Octopus Aim Vct. It trades about -0.17 of its total potential returns per unit of risk. Octopus Aim Vct is currently generating about -0.16 per unit of volatility. If you would invest  4,925  in Octopus Aim Vct on December 2, 2024 and sell it today you would lose (145.00) from holding Octopus Aim Vct or give up 2.94% of portfolio value over 90 days.

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

JD Sports Fashion  vs.  Octopus Aim Vct

JD Sports Fashion

Risk-Adjusted Performance

Very Weak

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 conflicting performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Octopus Aim Vct

Risk-Adjusted Performance

Very Weak

Over the last 90 days Octopus Aim Vct has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Octopus Aim is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with JD Sports and Octopus Aim

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

The idea behind JD Sports Fashion and Octopus Aim Vct 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.