Correlation Between Teladoc Health and JD

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

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

Diversification Opportunities for Teladoc Health and JD

0.39

Correlation Coefficient

Teladoc Health  JD

Weak diversification

The 3 months correlation between Teladoc and JD is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Teladoc Health and JD Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Inc and Teladoc 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 Teladoc Health 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 Teladoc Health i.e., Teladoc Health and JD go up and down completely randomly.

Pair Corralation between Teladoc Health and JD

Assuming the 90 days trading horizon Teladoc Health is expected to generate 1.17 times more return on investment than JD. However, Teladoc Health is 1.17 times more volatile than JD Inc. It trades about 0.19 of its potential returns per unit of risk. JD Inc is currently generating about 0.19 per unit of risk. If you would invest  134.00  in Teladoc Health on September 9, 2024 and sell it today you would earn a total of  88.00  from holding Teladoc Health or generate 65.67% return on investment over 90 days.

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

Teladoc Health  vs.  JD Inc

Teladoc Health

Risk-Adjusted Performance

14 of 100

Good

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

JD Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JD Inc are ranked lower than 15 (%) 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.

Pair Trading with Teladoc Health and JD

The main advantage of trading using opposite Teladoc Health and JD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teladoc Health 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 Teladoc Health 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.