Correlation Between Yunji and JD

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

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

Diversification Opportunities for Yunji and JD

0.63

Correlation Coefficient

Yunji  JD

Poor diversification

The 3 months correlation between Yunji and JD is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Yunji Inc 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 Yunji 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 Yunji Inc 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 Yunji i.e., Yunji and JD go up and down completely randomly.

Pair Corralation between Yunji and JD

Allowing for the 90-day total investment horizon Yunji is expected to generate 1.15 times less return on investment than JD. In addition to that, Yunji is 1.31 times more volatile than JD Inc Adr. It trades about 0.07 of its total potential returns per unit of risk. JD Inc Adr is currently generating about 0.1 per unit of volatility. If you would invest  3,613  in JD Inc Adr on December 25, 2024 and sell it today you would earn a total of  644.00  from holding JD Inc Adr or generate 17.82% return on investment over 90 days.

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

Yunji Inc  vs.  JD Inc Adr

Yunji Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Yunji Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward-looking indicators, Yunji revealed solid returns over the last few months and may actually be approaching a breakup point.

JD Inc Adr

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JD Inc Adr are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, JD exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yunji and JD

The main advantage of trading using opposite Yunji and JD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yunji 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 Yunji Inc 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.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.