Correlation Between JD Sports and Kingboard Chemical

Can any of the company-specific risk be diversified away by investing in both JD Sports and Kingboard Chemical 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 Kingboard Chemical 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 Kingboard Chemical Holdings, you can compare the effects of market volatilities on JD Sports and Kingboard Chemical 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 Kingboard Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Kingboard Chemical.

Diversification Opportunities for JD Sports and Kingboard Chemical

0.8

Correlation Coefficient

JD Sports  Kingboard Chemical

Very poor diversification

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

Pair Corralation between JD Sports and Kingboard Chemical

Assuming the 90 days horizon JD Sports is expected to generate 1.01 times less return on investment than Kingboard Chemical. But when comparing it to its historical volatility, JD Sports Fashion is 1.07 times less risky than Kingboard Chemical. It trades about 0.1 of its potential returns per unit of risk. Kingboard Chemical Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,273  in Kingboard Chemical Holdings on May 7, 2025 and sell it today you would earn a total of  232.00  from holding Kingboard Chemical Holdings or generate 18.22% return on investment over 90 days.

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

JD Sports Fashion  vs.  Kingboard Chemical Holdings

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.

Kingboard Chemical

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Kingboard Chemical Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Kingboard Chemical showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JD Sports and Kingboard Chemical

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

The idea behind JD Sports Fashion and Kingboard Chemical Holdings 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.