Correlation Between JD and QRTEA Old

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

Diversification Opportunities for JD and QRTEA Old

-0.5

Correlation Coefficient

JD  QRTEA Old

Very good diversification

The 3 months correlation between JD and QRTEA is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding JD Inc Adr and QRTEA Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QRTEA Old 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 QRTEA Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QRTEA Old has no effect on the direction of JD i.e., JD and QRTEA Old go up and down completely randomly.

Pair Corralation between JD and QRTEA Old

Allowing for the 90-day total investment horizon JD Inc Adr is expected to generate 0.88 times more return on investment than QRTEA Old. However, JD Inc Adr is 1.13 times less risky than QRTEA Old. It trades about 0.1 of its potential returns per unit of risk. QRTEA Old is currently generating about 0.06 per unit of risk. If you would invest  3,498  in JD Inc Adr on December 27, 2024 and sell it today you would earn a total of  680.00  from holding JD Inc Adr or generate 19.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	63.33%
Values	Daily Returns

JD Inc Adr  vs.  QRTEA Old

JD Inc Adr

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JD Inc Adr are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, JD exhibited solid returns over the last few months and may actually be approaching a breakup point.

QRTEA Old

Risk-Adjusted Performance

Insignificant

Over the last 90 days QRTEA Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak technical and fundamental indicators, QRTEA Old sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JD and QRTEA Old

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

The idea behind JD Inc Adr and QRTEA Old 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.