Correlation Between JD SPORTS and STMICROELECTRONICS

Can any of the company-specific risk be diversified away by investing in both JD SPORTS and STMICROELECTRONICS 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 STMICROELECTRONICS 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 STMICROELECTRONICS, you can compare the effects of market volatilities on JD SPORTS and STMICROELECTRONICS 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 STMICROELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD SPORTS and STMICROELECTRONICS.

Diversification Opportunities for JD SPORTS and STMICROELECTRONICS

0.34

Correlation Coefficient

JD SPORTS  STMICROELECTRONICS

Weak diversification

The 3 months correlation between 9JD and STMICROELECTRONICS is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding JD SPORTS FASH and STMICROELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMICROELECTRONICS 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 STMICROELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMICROELECTRONICS has no effect on the direction of JD SPORTS i.e., JD SPORTS and STMICROELECTRONICS go up and down completely randomly.

Pair Corralation between JD SPORTS and STMICROELECTRONICS

Assuming the 90 days horizon JD SPORTS is expected to generate 2.28 times less return on investment than STMICROELECTRONICS. In addition to that, JD SPORTS is 1.2 times more volatile than STMICROELECTRONICS. It trades about 0.1 of its total potential returns per unit of risk. STMICROELECTRONICS is currently generating about 0.27 per unit of volatility. If you would invest  1,924  in STMICROELECTRONICS on April 24, 2025 and sell it today you would earn a total of  874.00  from holding STMICROELECTRONICS or generate 45.43% return on investment over 90 days.

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

JD SPORTS FASH  vs.  STMICROELECTRONICS

JD SPORTS FASH

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JD SPORTS FASH are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, JD SPORTS reported solid returns over the last few months and may actually be approaching a breakup point.

STMICROELECTRONICS

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in STMICROELECTRONICS are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain primary indicators, STMICROELECTRONICS exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JD SPORTS and STMICROELECTRONICS

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

The idea behind JD SPORTS FASH and STMICROELECTRONICS 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.