Correlation Between Mercadolibre and Jd Inc

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

Diversification Opportunities for Mercadolibre and Jd Inc

-0.15
  Correlation Coefficient

Good diversification

The 3 months correlation between Mercadolibre and Jd Inc is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Mercadolibre 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 Mercadolibre 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 Mercadolibre 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 Mercadolibre i.e., Mercadolibre and Jd Inc go up and down completely randomly.

Pair Corralation between Mercadolibre and Jd Inc

Given the investment horizon of 90 days Mercadolibre is expected to under-perform the Jd Inc. In addition to that, Mercadolibre is 1.45 times more volatile than Jd Inc ADR. It trades about -0.15 of its total potential returns per unit of risk. Jd Inc ADR is currently generating about 0.05 per unit of volatility. If you would invest  6,175  in Jd Inc ADR on April 3, 2022 and sell it today you would earn a total of  420.00  from holding Jd Inc ADR or generate 6.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Mercadolibre  vs.  Jd Inc ADR

 Performance (%) 
      Timeline 
Mercadolibre 
Mercadolibre Performance
0 of 100
Over the last 90 days Mercadolibre has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in August 2022. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Structure and Payout Changes

Dividend Date
2018-01-16
Ex Dividend Date
2017-12-28

Mercadolibre 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 sluggish fundamental indicators, Jd Inc may actually be approaching a critical reversion point that can send shares even higher in August 2022.

Structure and Payout Changes

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

Jd Inc Price Channel

Mercadolibre and Jd Inc Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Mercadolibre and Jd Inc

The main advantage of trading using opposite Mercadolibre and Jd Inc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercadolibre 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 Mercadolibre 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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