Correlation Between JD Food and Asia Metal

Can any of the company-specific risk be diversified away by investing in both JD Food and Asia Metal 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 Metal 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 Metal Public, you can compare the effects of market volatilities on JD Food and Asia Metal 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 Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Food and Asia Metal.

Diversification Opportunities for JD Food and Asia Metal

0.33

Correlation Coefficient

JD Food  Asia Metal

Weak diversification

The 3 months correlation between JDF and Asia is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding JD Food PCL and Asia Metal Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Metal Public 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 Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Metal Public has no effect on the direction of JD Food i.e., JD Food and Asia Metal go up and down completely randomly.

Pair Corralation between JD Food and Asia Metal

Assuming the 90 days trading horizon JD Food PCL is expected to generate 0.64 times more return on investment than Asia Metal. However, JD Food PCL is 1.56 times less risky than Asia Metal. It trades about 0.01 of its potential returns per unit of risk. Asia Metal Public is currently generating about -0.25 per unit of risk. If you would invest  212.00  in JD Food PCL on September 15, 2024 and sell it today you would earn a total of  0.00  from holding JD Food PCL or generate 0.0% return on investment over 90 days.

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

JD Food PCL  vs.  Asia Metal Public

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 Metal Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asia Metal Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with JD Food and Asia Metal

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

The idea behind JD Food PCL and Asia Metal Public 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.