Correlation Between JD Sports and Top Wealth

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

Diversification Opportunities for JD Sports and Top Wealth

0.39

Correlation Coefficient

JD Sports  Top Wealth

Weak diversification

The 3 months correlation between JDDSF and Top is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Top Wealth Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Top Wealth Group 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 Top Wealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Top Wealth Group has no effect on the direction of JD Sports i.e., JD Sports and Top Wealth go up and down completely randomly.

Pair Corralation between JD Sports and Top Wealth

Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the Top Wealth. But the pink sheet apears to be less risky and, when comparing its historical volatility, JD Sports Fashion is 29.27 times less risky than Top Wealth. The pink sheet trades about 0.0 of its potential returns per unit of risk. The Top Wealth Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Top Wealth Group on October 11, 2024 and sell it today you would earn a total of  24.00  from holding Top Wealth Group or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	64.81%
Values	Daily Returns

JD Sports Fashion  vs.  Top Wealth Group

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.

Top Wealth Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Top Wealth Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak 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.

Pair Trading with JD Sports and Top Wealth

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

The idea behind JD Sports Fashion and Top Wealth Group 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.