Correlation Between JD Sports and Tianjin Capital

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

Diversification Opportunities for JD Sports and Tianjin Capital

-0.65

Correlation Coefficient

JD Sports  Tianjin Capital

Excellent diversification

The 3 months correlation between JDSPY and Tianjin is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Tianjin Capital Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianjin Capital Envi 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 Tianjin Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianjin Capital Envi has no effect on the direction of JD Sports i.e., JD Sports and Tianjin Capital go up and down completely randomly.

Pair Corralation between JD Sports and Tianjin Capital

Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the Tianjin Capital. But the pink sheet apears to be less risky and, when comparing its historical volatility, JD Sports Fashion is 1.37 times less risky than Tianjin Capital. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Tianjin Capital Environmental is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  9.93  in Tianjin Capital Environmental on October 26, 2024 and sell it today you would earn a total of  28.07  from holding Tianjin Capital Environmental or generate 282.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

JD Sports Fashion  vs.  Tianjin Capital Environmental

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. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Tianjin Capital Envi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tianjin Capital Environmental has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Tianjin Capital 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 Sports and Tianjin Capital

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

The idea behind JD Sports Fashion and Tianjin Capital Environmental 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 Commodity Directory module to find actively traded commodities issued by global exchanges.