Correlation Between JD Food and Union Textile

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

Diversification Opportunities for JD Food and Union Textile

0.0

Correlation Coefficient

JD Food  Union Textile

Pay attention - limited upside

The 3 months correlation between JDF and Union is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding JD Food PCL and Union Textile Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Textile Industries 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 Union Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Textile Industries has no effect on the direction of JD Food i.e., JD Food and Union Textile go up and down completely randomly.

Pair Corralation between JD Food and Union Textile

If you would invest (100.00) in Union Textile Industries on October 10, 2024 and sell it today you would earn a total of  100.00  from holding Union Textile Industries or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

JD Food PCL  vs.  Union Textile Industries

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 quite persistent technical and fundamental indicators, JD Food is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Union Textile Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Union Textile Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Union Textile is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with JD Food and Union Textile

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

The idea behind JD Food PCL and Union Textile Industries 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.