Correlation Between Amer Sports, and Continental

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

By analyzing existing cross correlation between Amer Sports, and Continental AG PK, you can compare the effects of market volatilities on Amer Sports, and Continental 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 Amer Sports, with a short position of Continental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amer Sports, and Continental.

Diversification Opportunities for Amer Sports, and Continental

0.74

Correlation Coefficient

Amer Sports,  Continental

Poor diversification

The 3 months correlation between Amer and Continental is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Amer Sports, and Continental AG PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental AG PK and Amer 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 Amer Sports, are associated (or correlated) with Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental AG PK has no effect on the direction of Amer Sports, i.e., Amer Sports, and Continental go up and down completely randomly.

Pair Corralation between Amer Sports, and Continental

Allowing for the 90-day total investment horizon Amer Sports, is expected to generate 1.39 times more return on investment than Continental. However, Amer Sports, is 1.39 times more volatile than Continental AG PK. It trades about 0.31 of its potential returns per unit of risk. Continental AG PK is currently generating about 0.03 per unit of risk. If you would invest  1,588  in Amer Sports, on September 26, 2024 and sell it today you would earn a total of  1,290  from holding Amer Sports, or generate 81.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Amer Sports,  vs.  Continental AG PK

Amer Sports,

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amer Sports, are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Amer Sports, unveiled solid returns over the last few months and may actually be approaching a breakup point.

Continental AG PK

Risk-Adjusted Performance

2 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Continental AG PK are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Continental is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amer Sports, and Continental

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

The idea behind Amer Sports, and Continental AG PK 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.