Correlation Between China Jo and Dicks Sporting

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

By analyzing existing cross correlation between China Jo Jo Drugstores and Dicks Sporting Goods, you can compare the effects of market volatilities on China Jo and Dicks Sporting 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 China Jo with a short position of Dicks Sporting. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Jo and Dicks Sporting.

Diversification Opportunities for China Jo and Dicks Sporting

-0.54

Correlation Coefficient

China Jo  Dicks Sporting

Excellent diversification

The 3 months correlation between China and Dicks is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding China Jo Jo Drugstores and Dicks Sporting Goods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dicks Sporting Goods and China Jo 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 China Jo Jo Drugstores are associated (or correlated) with Dicks Sporting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dicks Sporting Goods has no effect on the direction of China Jo i.e., China Jo and Dicks Sporting go up and down completely randomly.

Pair Corralation between China Jo and Dicks Sporting

Given the investment horizon of 90 days China Jo Jo Drugstores is expected to under-perform the Dicks Sporting. In addition to that, China Jo is 1.6 times more volatile than Dicks Sporting Goods. It trades about -0.16 of its total potential returns per unit of risk. Dicks Sporting Goods is currently generating about 0.25 per unit of volatility. If you would invest  19,872  in Dicks Sporting Goods on September 15, 2024 and sell it today you would earn a total of  2,467  from holding Dicks Sporting Goods or generate 12.41% return on investment over 90 days.

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

China Jo Jo Drugstores  vs.  Dicks Sporting Goods

China Jo Jo

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in China Jo Jo Drugstores are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward-looking indicators, China Jo exhibited solid returns over the last few months and may actually be approaching a breakup point.

Dicks Sporting Goods

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dicks Sporting Goods are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent forward-looking signals, Dicks Sporting may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with China Jo and Dicks Sporting

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

The idea behind China Jo Jo Drugstores and Dicks Sporting Goods 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.