Correlation Between JD Food and Kingsmen CMTI

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

By analyzing existing cross correlation between JD Food PCL and Kingsmen CMTI Public, you can compare the effects of market volatilities on JD Food and Kingsmen CMTI 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 Food with a short position of Kingsmen CMTI. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Food and Kingsmen CMTI.

Diversification Opportunities for JD Food and Kingsmen CMTI

-0.16

Correlation Coefficient

JD Food  Kingsmen CMTI

Good diversification

The 3 months correlation between JDF and Kingsmen is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding JD Food PCL and Kingsmen CMTI Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingsmen CMTI Public and JD Food 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 Food PCL are associated (or correlated) with Kingsmen CMTI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingsmen CMTI Public has no effect on the direction of JD Food i.e., JD Food and Kingsmen CMTI go up and down completely randomly.

Pair Corralation between JD Food and Kingsmen CMTI

Assuming the 90 days trading horizon JD Food PCL is expected to under-perform the Kingsmen CMTI. But the stock apears to be less risky and, when comparing its historical volatility, JD Food PCL is 1.92 times less risky than Kingsmen CMTI. The stock trades about -0.09 of its potential returns per unit of risk. The Kingsmen CMTI Public is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  110.00  in Kingsmen CMTI Public on September 4, 2024 and sell it today you would earn a total of  9.00  from holding Kingsmen CMTI Public or generate 8.18% return on investment over 90 days.

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

JD Food PCL  vs.  Kingsmen CMTI Public

JD Food PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JD Food PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Kingsmen CMTI Public

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kingsmen CMTI Public are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, Kingsmen CMTI may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with JD Food and Kingsmen CMTI

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

The idea behind JD Food PCL and Kingsmen CMTI Public 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.