Correlation Between JD Sports and Baird Medical

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

Diversification Opportunities for JD Sports and Baird Medical

0.07

Correlation Coefficient

JD Sports  Baird Medical

Significant diversification

The 3 months correlation between JDDSF and Baird is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Baird Medical Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baird Medical Investment 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 Baird Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baird Medical Investment has no effect on the direction of JD Sports i.e., JD Sports and Baird Medical go up and down completely randomly.

Pair Corralation between JD Sports and Baird Medical

Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the Baird Medical. But the pink sheet apears to be less risky and, when comparing its historical volatility, JD Sports Fashion is 24.85 times less risky than Baird Medical. The pink sheet trades about -0.24 of its potential returns per unit of risk. The Baird Medical Investment is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  3.97  in Baird Medical Investment on October 25, 2024 and sell it today you would earn a total of  6.03  from holding Baird Medical Investment or generate 151.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

JD Sports Fashion  vs.  Baird Medical Investment

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. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Baird Medical Investment

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Baird Medical Investment are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Baird Medical showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JD Sports and Baird Medical

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

The idea behind JD Sports Fashion and Baird Medical Investment 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.