Correlation Between ANTA Sports and LILLY

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

By analyzing existing cross correlation between ANTA Sports Products and LILLY ELI 31, you can compare the effects of market volatilities on ANTA Sports and LILLY 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 ANTA Sports with a short position of LILLY. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANTA Sports and LILLY.

Diversification Opportunities for ANTA Sports and LILLY

0.39

Correlation Coefficient

ANTA Sports  LILLY

Weak diversification

The 3 months correlation between ANTA and LILLY is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding ANTA Sports Products and LILLY ELI 31 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LILLY ELI 31 and ANTA 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 ANTA Sports Products are associated (or correlated) with LILLY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LILLY ELI 31 has no effect on the direction of ANTA Sports i.e., ANTA Sports and LILLY go up and down completely randomly.

Pair Corralation between ANTA Sports and LILLY

Assuming the 90 days horizon ANTA Sports Products is expected to generate 9.2 times more return on investment than LILLY. However, ANTA Sports is 9.2 times more volatile than LILLY ELI 31. It trades about 0.03 of its potential returns per unit of risk. LILLY ELI 31 is currently generating about -0.03 per unit of risk. If you would invest  25,527  in ANTA Sports Products on September 14, 2024 and sell it today you would earn a total of  1,299  from holding ANTA Sports Products or generate 5.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	72.8%
Values	Daily Returns

ANTA Sports Products  vs.  LILLY ELI 31

ANTA Sports Products

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ANTA Sports Products are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, ANTA Sports showed solid returns over the last few months and may actually be approaching a breakup point.

LILLY ELI 31

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LILLY ELI 31 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, LILLY is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ANTA Sports and LILLY

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

The idea behind ANTA Sports Products and LILLY ELI 31 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.