Correlation Between JD Health and Mid-Atlantic Home

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

By analyzing existing cross correlation between JD Health International and Mid Atlantic Home Health, you can compare the effects of market volatilities on JD Health and Mid-Atlantic Home 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 Health with a short position of Mid-Atlantic Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Health and Mid-Atlantic Home.

Diversification Opportunities for JD Health and Mid-Atlantic Home

-1.0

Correlation Coefficient

JD Health  Mid-Atlantic Home

Pay attention - limited upside

The 3 months correlation between JDHIF and Mid-Atlantic is -1.0. Overlapping area represents the amount of risk that can be diversified away by holding JD Health International and Mid Atlantic Home Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Atlantic Home and JD Health 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 Health International are associated (or correlated) with Mid-Atlantic Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Atlantic Home has no effect on the direction of JD Health i.e., JD Health and Mid-Atlantic Home go up and down completely randomly.

Pair Corralation between JD Health and Mid-Atlantic Home

Assuming the 90 days horizon JD Health International is expected to generate 0.53 times more return on investment than Mid-Atlantic Home. However, JD Health International is 1.89 times less risky than Mid-Atlantic Home. It trades about -0.08 of its potential returns per unit of risk. Mid Atlantic Home Health is currently generating about -0.06 per unit of risk. If you would invest  1,108  in JD Health International on September 5, 2024 and sell it today you would lose (795.00) from holding JD Health International or give up 71.75% of portfolio value over 90 days.

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

JD Health International  vs.  Mid Atlantic Home Health

JD Health International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JD Health International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, JD Health is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Mid Atlantic Home

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mid Atlantic Home Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Mid-Atlantic Home is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with JD Health and Mid-Atlantic Home

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

The idea behind JD Health International and Mid Atlantic Home Health 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.