Correlation Between Liquidity Services and JD
Can any of the company-specific risk be diversified away by investing in both Liquidity Services 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 Liquidity Services and JD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liquidity Services and JD Inc Adr, you can compare the effects of market volatilities on Liquidity Services 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 Liquidity Services with a short position of JD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liquidity Services and JD.
Diversification Opportunities for Liquidity Services and JD
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Liquidity and JD is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Liquidity Services 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 Liquidity Services 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 Liquidity Services 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 Liquidity Services i.e., Liquidity Services and JD go up and down completely randomly.
Pair Corralation between Liquidity Services and JD
Given the investment horizon of 90 days Liquidity Services is expected to generate 0.73 times more return on investment than JD. However, Liquidity Services is 1.37 times less risky than JD. It trades about 0.06 of its potential returns per unit of risk. JD Inc Adr is currently generating about -0.02 per unit of risk. If you would invest 1,271 in Liquidity Services on January 20, 2024 and sell it today you would earn a total of 420.00 from holding Liquidity Services or generate 33.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liquidity Services vs. JD Inc Adr
Performance |
| Timeline |
| Liquidity Services |
| JD Inc Adr |
Liquidity Services and JD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liquidity Services and JD
The main advantage of trading using opposite Liquidity Services and JD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liquidity Services 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.| Liquidity Services vs. Shoe Carnival | Liquidity Services vs. Hibbett Sports | Liquidity Services vs. Citi Trends | Liquidity Services vs. Zumiez Inc |
Check out your portfolio center.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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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