Correlation Between JD SPORTS and CSL

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

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

Diversification Opportunities for JD SPORTS and CSL

0.46

Correlation Coefficient

JD SPORTS  CSL

Very weak diversification

The 3 months correlation between 9JD and CSL is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding JD SPORTS FASH and CSL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL Limited and JD SPORTS 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 JD SPORTS FASH are associated (or correlated) with CSL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSL Limited has no effect on the direction of JD SPORTS i.e., JD SPORTS and CSL go up and down completely randomly.

Pair Corralation between JD SPORTS and CSL

Assuming the 90 days horizon JD SPORTS FASH is expected to generate 2.65 times more return on investment than CSL. However, JD SPORTS is 2.65 times more volatile than CSL Limited. It trades about 0.14 of its potential returns per unit of risk. CSL Limited is currently generating about -0.18 per unit of risk. If you would invest  94.00  in JD SPORTS FASH on April 5, 2025 and sell it today you would earn a total of  8.00  from holding JD SPORTS FASH or generate 8.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

JD SPORTS FASH  vs.  CSL Limited

JD SPORTS FASH

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JD SPORTS FASH are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, JD SPORTS reported solid returns over the last few months and may actually be approaching a breakup point.

CSL Limited

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CSL Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, CSL is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with JD SPORTS and CSL

The main advantage of trading using opposite JD SPORTS and CSL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD SPORTS position performs unexpectedly, CSL 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 CSL will offset losses from the drop in CSL's long position.

The idea behind JD SPORTS FASH and CSL Limited 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.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.