Correlation Between Optima Health and JD Sports

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

By analyzing existing cross correlation between Optima Health plc and JD Sports Fashion, you can compare the effects of market volatilities on Optima Health and JD Sports 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 Optima Health with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optima Health and JD Sports.

Diversification Opportunities for Optima Health and JD Sports

0.15

Correlation Coefficient

Optima Health  JD Sports

Average diversification

The 3 months correlation between Optima and JD Sports is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Optima Health plc and JD Sports Fashion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Sports Fashion and Optima Health 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 Optima Health plc are associated (or correlated) with JD Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Sports Fashion has no effect on the direction of Optima Health i.e., Optima Health and JD Sports go up and down completely randomly.

Pair Corralation between Optima Health and JD Sports

Assuming the 90 days trading horizon Optima Health plc is expected to generate 0.75 times more return on investment than JD Sports. However, Optima Health plc is 1.34 times less risky than JD Sports. It trades about 0.1 of its potential returns per unit of risk. JD Sports Fashion is currently generating about 0.07 per unit of risk. If you would invest  18,250  in Optima Health plc on April 24, 2025 and sell it today you would earn a total of  2,150  from holding Optima Health plc or generate 11.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Optima Health plc  vs.  JD Sports Fashion

Optima Health plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Optima Health plc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Optima Health may actually be approaching a critical reversion point that can send shares even higher in August 2025.

JD Sports Fashion

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JD Sports Fashion are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, JD Sports may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Optima Health and JD Sports

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

The idea behind Optima Health plc and JD Sports Fashion 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..