Correlation Between Nike and JIADE LIMITED

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

By analyzing existing cross correlation between Nike Inc and JIADE LIMITED Common, you can compare the effects of market volatilities on Nike and JIADE LIMITED 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 Nike with a short position of JIADE LIMITED. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nike and JIADE LIMITED.

Diversification Opportunities for Nike and JIADE LIMITED

-0.16

Correlation Coefficient

Nike  JIADE LIMITED

Good diversification

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

Pair Corralation between Nike and JIADE LIMITED

Considering the 90-day investment horizon Nike Inc is expected to generate 0.25 times more return on investment than JIADE LIMITED. However, Nike Inc is 3.98 times less risky than JIADE LIMITED. It trades about 0.08 of its potential returns per unit of risk. JIADE LIMITED Common is currently generating about -0.24 per unit of risk. If you would invest  7,719  in Nike Inc on September 4, 2024 and sell it today you would earn a total of  190.00  from holding Nike Inc or generate 2.46% return on investment over 90 days.

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

Nike Inc  vs.  JIADE LIMITED Common

Nike Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nike Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking signals, Nike is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

JIADE LIMITED Common

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JIADE LIMITED Common are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, JIADE LIMITED reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nike and JIADE LIMITED

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

The idea behind Nike Inc and JIADE LIMITED Common 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.

Check out your portfolio center.

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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.