Correlation Between JD SPORTS and LION ONE

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

By analyzing existing cross correlation between JD SPORTS FASH and LION ONE METALS, you can compare the effects of market volatilities on JD SPORTS and LION ONE 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 LION ONE. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD SPORTS and LION ONE.

Diversification Opportunities for JD SPORTS and LION ONE

0.23

Correlation Coefficient

JD SPORTS  LION ONE

Modest diversification

The 3 months correlation between 9JD and LION is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding JD SPORTS FASH and LION ONE METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LION ONE METALS 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 FASH are associated (or correlated) with LION ONE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LION ONE METALS has no effect on the direction of JD SPORTS i.e., JD SPORTS and LION ONE go up and down completely randomly.

Pair Corralation between JD SPORTS and LION ONE

Assuming the 90 days horizon JD SPORTS FASH is expected to under-perform the LION ONE. But the stock apears to be less risky and, when comparing its historical volatility, JD SPORTS FASH is 1.21 times less risky than LION ONE. The stock trades about -0.1 of its potential returns per unit of risk. The LION ONE METALS is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  20.00  in LION ONE METALS on September 4, 2024 and sell it today you would lose (2.00) from holding LION ONE METALS or give up 10.0% of portfolio value over 90 days.

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

JD SPORTS FASH  vs.  LION ONE METALS

JD SPORTS FASH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JD SPORTS FASH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

LION ONE METALS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LION ONE METALS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, LION ONE is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with JD SPORTS and LION ONE

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

The idea behind JD SPORTS FASH and LION ONE METALS 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.