Correlation Between JD Sports and Weiss Korea

Can any of the company-specific risk be diversified away by investing in both JD Sports and Weiss Korea 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 Weiss Korea 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 Weiss Korea Opportunity, you can compare the effects of market volatilities on JD Sports and Weiss Korea 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 Weiss Korea. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Weiss Korea.

Diversification Opportunities for JD Sports and Weiss Korea

0.67

Correlation Coefficient

JD Sports  Weiss Korea

Poor diversification

The 3 months correlation between JD Sports and Weiss is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Weiss Korea Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weiss Korea Opportunity 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 Weiss Korea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weiss Korea Opportunity has no effect on the direction of JD Sports i.e., JD Sports and Weiss Korea go up and down completely randomly.

Pair Corralation between JD Sports and Weiss Korea

Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the Weiss Korea. In addition to that, JD Sports is 14.43 times more volatile than Weiss Korea Opportunity. It trades about -0.19 of its total potential returns per unit of risk. Weiss Korea Opportunity is currently generating about -0.18 per unit of volatility. If you would invest  13,700  in Weiss Korea Opportunity on October 24, 2024 and sell it today you would lose (100.00) from holding Weiss Korea Opportunity or give up 0.73% of portfolio value over 90 days.

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

JD Sports Fashion  vs.  Weiss Korea Opportunity

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. 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 February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Weiss Korea Opportunity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Weiss Korea Opportunity 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 comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with JD Sports and Weiss Korea

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

The idea behind JD Sports Fashion and Weiss Korea Opportunity 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.