Correlation Between JD Food and Asia Medical

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

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

Diversification Opportunities for JD Food and Asia Medical

0.11

Correlation Coefficient

JD Food  Asia Medical

Average diversification

The 3 months correlation between JDF and Asia is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding JD Food PCL and Asia Medical Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Medical Agricultural and JD Food 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 Food PCL are associated (or correlated) with Asia Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Medical Agricultural has no effect on the direction of JD Food i.e., JD Food and Asia Medical go up and down completely randomly.

Pair Corralation between JD Food and Asia Medical

Assuming the 90 days trading horizon JD Food PCL is expected to under-perform the Asia Medical. But the stock apears to be less risky and, when comparing its historical volatility, JD Food PCL is 1.33 times less risky than Asia Medical. The stock trades about -0.04 of its potential returns per unit of risk. The Asia Medical Agricultural is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  142.00  in Asia Medical Agricultural on September 15, 2024 and sell it today you would lose (4.00) from holding Asia Medical Agricultural or give up 2.82% of portfolio value over 90 days.

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

JD Food PCL  vs.  Asia Medical Agricultural

JD Food PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JD Food PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, JD Food is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Asia Medical Agricultural

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asia Medical Agricultural has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Asia Medical is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JD Food and Asia Medical

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

The idea behind JD Food PCL and Asia Medical Agricultural 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.