Correlation Between JD and Medical Care

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

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

Diversification Opportunities for JD and Medical Care

-0.1

Correlation Coefficient

JD  Medical Care

Good diversification

The 3 months correlation between JD and Medical is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding JD Inc Adr and Medical Care Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Care Technologies and JD 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 Inc Adr are associated (or correlated) with Medical Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Care Technologies has no effect on the direction of JD i.e., JD and Medical Care go up and down completely randomly.

Pair Corralation between JD and Medical Care

Allowing for the 90-day total investment horizon JD Inc Adr is expected to under-perform the Medical Care. But the stock apears to be less risky and, when comparing its historical volatility, JD Inc Adr is 8.57 times less risky than Medical Care. The stock trades about -0.43 of its potential returns per unit of risk. The Medical Care Technologies is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  0.16  in Medical Care Technologies on October 9, 2024 and sell it today you would earn a total of  0.07  from holding Medical Care Technologies or generate 43.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

JD Inc Adr  vs.  Medical Care Technologies

JD Inc Adr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JD Inc Adr has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental 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.

Medical Care Technologies

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Medical Care Technologies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Medical Care exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JD and Medical Care

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

The idea behind JD Inc Adr and Medical Care Technologies 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.