Correlation Between JD and Faraday Future

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

By analyzing existing cross correlation between JD Inc Adr and Faraday Future Intelligent, you can compare the effects of market volatilities on JD and Faraday Future 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 with a short position of Faraday Future. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD and Faraday Future.

Diversification Opportunities for JD and Faraday Future

-0.37

Correlation Coefficient

JD  Faraday Future

Very good diversification

The 3 months correlation between JD and Faraday is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding JD Inc Adr and Faraday Future Intelligent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faraday Future Intel and JD 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 Inc Adr are associated (or correlated) with Faraday Future. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Faraday Future Intel has no effect on the direction of JD i.e., JD and Faraday Future go up and down completely randomly.

Pair Corralation between JD and Faraday Future

Allowing for the 90-day total investment horizon JD Inc Adr is expected to under-perform the Faraday Future. But the stock apears to be less risky and, when comparing its historical volatility, JD Inc Adr is 5.2 times less risky than Faraday Future. The stock trades about -0.05 of its potential returns per unit of risk. The Faraday Future Intelligent is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  113.00  in Faraday Future Intelligent on May 17, 2025 and sell it today you would earn a total of  187.00  from holding Faraday Future Intelligent or generate 165.49% return on investment over 90 days.

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

JD Inc Adr  vs.  Faraday Future Intelligent

JD Inc Adr

Risk-Adjusted Performance

Weakest

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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Faraday Future Intel

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Faraday Future Intelligent are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Faraday Future demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JD and Faraday Future

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

The idea behind JD Inc Adr and Faraday Future Intelligent 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.

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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.