Correlation Between JD and Global E

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

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

Diversification Opportunities for JD and Global E

-0.47

Correlation Coefficient

JD  Global E

Very good diversification

The 3 months correlation between JD and Global is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding JD Inc Adr and Global E Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global E Online and JD 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 Inc Adr are associated (or correlated) with Global E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global E Online has no effect on the direction of JD i.e., JD and Global E go up and down completely randomly.

Pair Corralation between JD and Global E

Allowing for the 90-day total investment horizon JD Inc Adr is expected to generate 1.11 times more return on investment than Global E. However, JD is 1.11 times more volatile than Global E Online. It trades about 0.19 of its potential returns per unit of risk. Global E Online is currently generating about -0.08 per unit of risk. If you would invest  2,242  in JD Inc Adr on February 7, 2024 and sell it today you would earn a total of  1,041  from holding JD Inc Adr or generate 46.43% return on investment over 90 days.

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

JD Inc Adr  vs.  Global E Online

JD Inc Adr

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JD Inc Adr are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, JD exhibited solid returns over the last few months and may actually be approaching a breakup point.

Global E Online

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global E Online has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with JD and Global E

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

The idea behind JD Inc Adr and Global E Online 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.