Correlation Between JD and Thermo Fisher

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

By analyzing existing cross correlation between JD Inc and Thermo Fisher Scientific, you can compare the effects of market volatilities on JD and Thermo Fisher 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 Thermo Fisher. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD and Thermo Fisher.

Diversification Opportunities for JD and Thermo Fisher

-0.34

Correlation Coefficient

JD  Thermo Fisher

Very good diversification

The 3 months correlation between JD and Thermo is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding JD Inc and Thermo Fisher Scientific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermo Fisher Scientific 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 are associated (or correlated) with Thermo Fisher. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thermo Fisher Scientific has no effect on the direction of JD i.e., JD and Thermo Fisher go up and down completely randomly.

Pair Corralation between JD and Thermo Fisher

Assuming the 90 days trading horizon JD Inc is expected to generate 1.63 times more return on investment than Thermo Fisher. However, JD is 1.63 times more volatile than Thermo Fisher Scientific. It trades about 0.09 of its potential returns per unit of risk. Thermo Fisher Scientific is currently generating about -0.08 per unit of risk. If you would invest  3,533  in JD Inc on December 30, 2024 and sell it today you would earn a total of  606.00  from holding JD Inc or generate 17.15% return on investment over 90 days.

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

JD Inc  vs.  Thermo Fisher Scientific

JD Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JD Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, JD sustained solid returns over the last few months and may actually be approaching a breakup point.

Thermo Fisher Scientific

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thermo Fisher Scientific has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with JD and Thermo Fisher

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

The idea behind JD Inc and Thermo Fisher Scientific 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.