Correlation Between Lupatech and JD

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Can any of the company-specific risk be diversified away by investing in both Lupatech and JD 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 Lupatech and JD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lupatech SA and JD Inc, you can compare the effects of market volatilities on Lupatech and JD 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 Lupatech with a short position of JD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lupatech and JD.

Diversification Opportunities for Lupatech and JD

-0.31
  Correlation Coefficient

Very good diversification

The 3 months correlation between Lupatech and JD is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Lupatech SA and JD Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Inc and Lupatech 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 Lupatech SA are associated (or correlated) with JD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Inc has no effect on the direction of Lupatech i.e., Lupatech and JD go up and down completely randomly.

Pair Corralation between Lupatech and JD

Assuming the 90 days trading horizon Lupatech SA is expected to under-perform the JD. But the stock apears to be less risky and, when comparing its historical volatility, Lupatech SA is 1.53 times less risky than JD. The stock trades about -0.06 of its potential returns per unit of risk. The JD Inc is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,430  in JD Inc on September 6, 2024 and sell it today you would earn a total of  1,152  from holding JD Inc or generate 47.41% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Lupatech SA  vs.  JD Inc

 Performance 
       Timeline  
Lupatech SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Lupatech SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
JD Inc 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in JD Inc are ranked lower than 13 (%) 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.

Lupatech and JD Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lupatech and JD

The main advantage of trading using opposite Lupatech and JD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lupatech position performs unexpectedly, JD 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 JD will offset losses from the drop in JD's long position.
The idea behind Lupatech SA and JD Inc 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.
Check out your portfolio center.
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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