Correlation Between JD and Hapvida Participaes

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

By analyzing existing cross correlation between JD Inc and Hapvida Participaes e, you can compare the effects of market volatilities on JD and Hapvida Participaes 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 Hapvida Participaes. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD and Hapvida Participaes.

Diversification Opportunities for JD and Hapvida Participaes

-0.54

Correlation Coefficient

JD  Hapvida Participaes

Excellent diversification

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

Pair Corralation between JD and Hapvida Participaes

Assuming the 90 days trading horizon JD Inc is expected to generate 1.25 times more return on investment than Hapvida Participaes. However, JD is 1.25 times more volatile than Hapvida Participaes e. It trades about 0.08 of its potential returns per unit of risk. Hapvida Participaes e is currently generating about -0.29 per unit of risk. If you would invest  3,752  in JD Inc on September 12, 2024 and sell it today you would earn a total of  222.00  from holding JD Inc or generate 5.92% 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  vs.  Hapvida Participaes e

JD Inc

Risk-Adjusted Performance

14 of 100

Good

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

Hapvida Participaes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hapvida Participaes e has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with JD and Hapvida Participaes

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

The idea behind JD Inc and Hapvida Participaes e 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.