Correlation Between Intouch Holdings and JD

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

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

Diversification Opportunities for Intouch Holdings and JD

0.38

Correlation Coefficient

Intouch Holdings  JD

Weak diversification

The 3 months correlation between Intouch and JD is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Intouch Holdings Public and JD Inc Adr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Inc Adr and Intouch Holdings 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 Intouch Holdings Public are associated (or correlated) with JD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Inc Adr has no effect on the direction of Intouch Holdings i.e., Intouch Holdings and JD go up and down completely randomly.

Pair Corralation between Intouch Holdings and JD

Assuming the 90 days trading horizon Intouch Holdings Public is expected to under-perform the JD. But the stock apears to be less risky and, when comparing its historical volatility, Intouch Holdings Public is 1.7 times less risky than JD. The stock trades about -0.25 of its potential returns per unit of risk. The JD Inc Adr is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,870  in JD Inc Adr on November 27, 2024 and sell it today you would lose (10.00) from holding JD Inc Adr or give up 0.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Intouch Holdings Public  vs.  JD Inc Adr

Intouch Holdings Public

Risk-Adjusted Performance

Very Weak

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

JD Inc Adr

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JD Inc Adr are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, JD reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intouch Holdings and JD

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

The idea behind Intouch Holdings Public and JD Inc Adr 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.