Correlation Between JD Food and Business Online

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

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

Diversification Opportunities for JD Food and Business Online

-0.28

Correlation Coefficient

JD Food  Business Online

Very good diversification

The 3 months correlation between JDF and Business is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding JD Food PCL and Business Online PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Business Online PCL and JD Food 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 Food PCL are associated (or correlated) with Business Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Business Online PCL has no effect on the direction of JD Food i.e., JD Food and Business Online go up and down completely randomly.

Pair Corralation between JD Food and Business Online

Assuming the 90 days trading horizon JD Food PCL is expected to under-perform the Business Online. In addition to that, JD Food is 1.18 times more volatile than Business Online PCL. It trades about -0.04 of its total potential returns per unit of risk. Business Online PCL is currently generating about 0.24 per unit of volatility. If you would invest  500.00  in Business Online PCL on April 22, 2025 and sell it today you would earn a total of  110.00  from holding Business Online PCL or generate 22.0% return on investment over 90 days.

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

JD Food PCL  vs.  Business Online PCL

JD Food PCL

Risk-Adjusted Performance

Very Weak

Over the last 90 days JD Food PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, JD Food is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Business Online PCL

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Business Online PCL are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, Business Online disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JD Food and Business Online

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

The idea behind JD Food PCL and Business Online PCL 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 Commodity Directory module to find actively traded commodities issued by global exchanges.