Correlation Between EBay and JD

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Can any of the company-specific risk be diversified away by investing in both EBay and JD 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 EBay and JD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EBay Inc and JD Inc Adr, you can compare the effects of market volatilities on EBay and JD 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 EBay with a short position of JD. Check out your portfolio center. Please also check ongoing floating volatility patterns of EBay and JD.

Diversification Opportunities for EBay and JD

0.59
  Correlation Coefficient
 JD

Very weak diversification

The 3 months correlation between EBay and JD is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding EBay Inc and JD Inc Adr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Inc Adr and EBay 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 EBay Inc are associated (or correlated) with JD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Inc Adr has no effect on the direction of EBay i.e., EBay and JD go up and down completely randomly.

Pair Corralation between EBay and JD

Given the investment horizon of 90 days EBay Inc is expected to generate 0.48 times more return on investment than JD. However, EBay Inc is 2.08 times less risky than JD. It trades about 0.19 of its potential returns per unit of risk. JD Inc Adr is currently generating about -0.01 per unit of risk. If you would invest  4,339  in EBay Inc on December 29, 2023 and sell it today you would earn a total of  939.00  from holding EBay Inc or generate 21.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

EBay Inc  vs.  JD Inc Adr

 Performance 
       Timeline  
EBay Inc 

Risk-Adjusted Performance

14 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in EBay Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, EBay showed solid returns over the last few months and may actually be approaching a breakup point.
JD Inc Adr 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days JD Inc Adr has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, JD is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

EBay and JD Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with EBay and JD

The main advantage of trading using opposite EBay and JD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EBay position performs unexpectedly, JD 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 will offset losses from the drop in JD's long position.
The idea behind EBay Inc and JD Inc Adr 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

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