Correlation Between JD Sports and ICZOOM Group

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

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

Diversification Opportunities for JD Sports and ICZOOM Group

0.8

Correlation Coefficient

JD Sports  ICZOOM Group

Very poor diversification

The 3 months correlation between JDDSF and ICZOOM is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and ICZOOM Group Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICZOOM Group Class and JD Sports 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 Sports Fashion are associated (or correlated) with ICZOOM Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICZOOM Group Class has no effect on the direction of JD Sports i.e., JD Sports and ICZOOM Group go up and down completely randomly.

Pair Corralation between JD Sports and ICZOOM Group

Assuming the 90 days horizon JD Sports Fashion is expected to generate 1.52 times more return on investment than ICZOOM Group. However, JD Sports is 1.52 times more volatile than ICZOOM Group Class. It trades about 0.1 of its potential returns per unit of risk. ICZOOM Group Class is currently generating about 0.01 per unit of risk. If you would invest  101.00  in JD Sports Fashion on May 20, 2025 and sell it today you would earn a total of  19.00  from holding JD Sports Fashion or generate 18.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	96.88%
Values	Daily Returns

JD Sports Fashion  vs.  ICZOOM Group Class

JD Sports Fashion

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in JD Sports Fashion are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, JD Sports reported solid returns over the last few months and may actually be approaching a breakup point.

ICZOOM Group Class

Risk-Adjusted Performance

Soft

Over the last 90 days ICZOOM Group Class has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, ICZOOM Group is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with JD Sports and ICZOOM Group

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

The idea behind JD Sports Fashion and ICZOOM Group Class 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.