Correlation Between JD Health and CareRx

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

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

Diversification Opportunities for JD Health and CareRx

-0.3

Correlation Coefficient

JD Health  CareRx

Very good diversification

The 3 months correlation between JDHIY and CareRx is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding JD Health International and CareRx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CareRx and JD Health 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 Health International are associated (or correlated) with CareRx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CareRx has no effect on the direction of JD Health i.e., JD Health and CareRx go up and down completely randomly.

Pair Corralation between JD Health and CareRx

If you would invest  381.00  in JD Health International on October 21, 2024 and sell it today you would earn a total of  0.00  from holding JD Health International or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.38%
Values	Daily Returns

JD Health International  vs.  CareRx

JD Health International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JD Health International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, JD Health is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

CareRx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CareRx has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, CareRx is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with JD Health and CareRx

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

The idea behind JD Health International and CareRx 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.