Correlation Between JD Sports and Smarttech247 Group

Can any of the company-specific risk be diversified away by investing in both JD Sports and Smarttech247 Group 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 Smarttech247 Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JD Sports Fashion and Smarttech247 Group PLC, you can compare the effects of market volatilities on JD Sports and Smarttech247 Group 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 Smarttech247 Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Smarttech247 Group.

Diversification Opportunities for JD Sports and Smarttech247 Group

-0.04

Correlation Coefficient

JD Sports  Smarttech247 Group

Good diversification

The 3 months correlation between JD Sports and Smarttech247 is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Smarttech247 Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smarttech247 Group PLC 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 Fashion are associated (or correlated) with Smarttech247 Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smarttech247 Group PLC has no effect on the direction of JD Sports i.e., JD Sports and Smarttech247 Group go up and down completely randomly.

Pair Corralation between JD Sports and Smarttech247 Group

Assuming the 90 days trading horizon JD Sports Fashion is expected to generate 2.08 times more return on investment than Smarttech247 Group. However, JD Sports is 2.08 times more volatile than Smarttech247 Group PLC. It trades about 0.29 of its potential returns per unit of risk. Smarttech247 Group PLC is currently generating about -0.21 per unit of risk. If you would invest  7,668  in JD Sports Fashion on April 25, 2025 and sell it today you would earn a total of  1,310  from holding JD Sports Fashion or generate 17.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

JD Sports Fashion  vs.  Smarttech247 Group PLC

JD Sports Fashion

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JD Sports Fashion are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, JD Sports exhibited solid returns over the last few months and may actually be approaching a breakup point.

Smarttech247 Group PLC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smarttech247 Group PLC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Smarttech247 Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JD Sports and Smarttech247 Group

The main advantage of trading using opposite JD Sports and Smarttech247 Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Smarttech247 Group 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 Smarttech247 Group will offset losses from the drop in Smarttech247 Group's long position.

The idea behind JD Sports Fashion and Smarttech247 Group PLC 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.