Correlation Between JD Sports and Weibo Corp

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

Diversification Opportunities for JD Sports and Weibo Corp

-0.39

Correlation Coefficient

JD Sports  Weibo Corp

Very good diversification

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

Pair Corralation between JD Sports and Weibo Corp

Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the Weibo Corp. In addition to that, JD Sports is 1.66 times more volatile than Weibo Corp. It trades about -0.17 of its total potential returns per unit of risk. Weibo Corp is currently generating about 0.03 per unit of volatility. If you would invest  959.00  in Weibo Corp on October 26, 2024 and sell it today you would earn a total of  19.00  from holding Weibo Corp or generate 1.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

JD Sports Fashion  vs.  Weibo Corp

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.

Weibo Corp

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Weibo Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Weibo Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JD Sports and Weibo Corp

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

The idea behind JD Sports Fashion and Weibo Corp 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 Global Correlations module to find global opportunities by holding instruments from different markets.