Correlation Between Amazon and Jd Inc

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

Diversification Opportunities for Amazon and Jd Inc

0.14
  Correlation Coefficient

Average diversification

The 3 months correlation between Amazon and Jd Inc is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Jd Inc ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jd Inc ADR and Amazon 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 Amazon Inc are associated (or correlated) with Jd Inc. 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 ADR has no effect on the direction of Amazon i.e., Amazon and Jd Inc go up and down completely randomly.

Pair Corralation between Amazon and Jd Inc

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the Jd Inc. But the stock apears to be less risky and, when comparing its historical volatility, Amazon Inc is 1.32 times less risky than Jd Inc. The stock trades about -0.06 of its potential returns per unit of risk. The Jd Inc ADR is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  5,612  in Jd Inc ADR on March 29, 2022 and sell it today you would earn a total of  1,034  from holding Jd Inc ADR or generate 18.42% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Amazon Inc  vs.  Jd Inc ADR

 Performance (%) 
      Timeline 
Amazon Inc 
Amazon Performance
0 of 100
Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in July 2022. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Structure and Payout Changes

Last Split Factor
20:1
Last Split Date
2022-06-06

Amazon Price Channel

Jd Inc ADR 
Jd Inc Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Jd Inc ADR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Jd Inc exhibited solid returns over the last few months and may actually be approaching a breakup point.

Structure and Payout Changes

Payout Ratio
0.22
Dividend Date
2022-06-14
Ex Dividend Date
2022-05-19

Jd Inc Price Channel

Amazon and Jd Inc Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Amazon and Jd Inc

The main advantage of trading using opposite Amazon and Jd Inc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Jd Inc 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 Inc will offset losses from the drop in Jd Inc's long position.
The idea behind Amazon Inc and Jd Inc ADR 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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