Correlation Between HP and Jd Inc

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

Diversification Opportunities for HP and Jd Inc

-0.47
  Correlation Coefficient

Very good diversification

The 3 months correlation between HP and Jd Inc is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding HP 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 HP 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 HP 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 HP i.e., HP and Jd Inc go up and down completely randomly.

Pair Corralation between HP and Jd Inc

Considering the 90-day investment horizon HP Inc is expected to generate 0.79 times more return on investment than Jd Inc. However, HP Inc is 1.27 times less risky than Jd Inc. It trades about 0.24 of its potential returns per unit of risk. Jd Inc ADR is currently generating about -0.13 per unit of risk. If you would invest  3,106  in HP Inc on May 14, 2022 and sell it today you would earn a total of  316.00  from holding HP Inc or generate 10.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.65%
ValuesDaily Returns

HP Inc  vs.  Jd Inc ADR

 Performance (%) 
       Timeline  
HP Inc 
HP Performance
0 of 100
Over the last 90 days HP Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm insiders.

HP Price Channel

Jd Inc ADR 
Jd Inc Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Jd Inc ADR are ranked lower than 5 (%) 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.

Jd Inc Price Channel

HP and Jd Inc Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HP and Jd Inc

The main advantage of trading using opposite HP and Jd Inc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP 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 HP 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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