Correlation Between JD Sports and MKDWELL Tech

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

Diversification Opportunities for JD Sports and MKDWELL Tech

0.49

Correlation Coefficient

JD Sports  MKDWELL Tech

Very weak diversification

The 3 months correlation between JDDSF and MKDWELL is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and MKDWELL Tech Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MKDWELL Tech Ordinary 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 MKDWELL Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MKDWELL Tech Ordinary has no effect on the direction of JD Sports i.e., JD Sports and MKDWELL Tech go up and down completely randomly.

Pair Corralation between JD Sports and MKDWELL Tech

Assuming the 90 days horizon JD Sports Fashion is expected to generate 0.37 times more return on investment than MKDWELL Tech. However, JD Sports Fashion is 2.71 times less risky than MKDWELL Tech. It trades about 0.03 of its potential returns per unit of risk. MKDWELL Tech Ordinary is currently generating about -0.09 per unit of risk. If you would invest  109.00  in JD Sports Fashion on October 9, 2024 and sell it today you would earn a total of  37.00  from holding JD Sports Fashion or generate 33.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	23.03%
Values	Daily Returns

JD Sports Fashion  vs.  MKDWELL Tech Ordinary

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 nearly stable basic indicators, JD Sports is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

MKDWELL Tech Ordinary

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MKDWELL Tech Ordinary 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 fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with JD Sports and MKDWELL Tech

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

The idea behind JD Sports Fashion and MKDWELL Tech Ordinary 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.