Correlation Between ANTA SPORTS and Cisco Systems

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Can any of the company-specific risk be diversified away by investing in both ANTA SPORTS and Cisco Systems 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 Cisco Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ANTA SPORTS PRODUCT and Cisco Systems, you can compare the effects of market volatilities on ANTA SPORTS and Cisco Systems 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 Cisco Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANTA SPORTS and Cisco Systems.

Diversification Opportunities for ANTA SPORTS and Cisco Systems

0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between ANTA and Cisco is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding ANTA SPORTS PRODUCT and Cisco Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cisco Systems 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 PRODUCT are associated (or correlated) with Cisco Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cisco Systems has no effect on the direction of ANTA SPORTS i.e., ANTA SPORTS and Cisco Systems go up and down completely randomly.

Pair Corralation between ANTA SPORTS and Cisco Systems

Assuming the 90 days trading horizon ANTA SPORTS PRODUCT is expected to generate 3.58 times more return on investment than Cisco Systems. However, ANTA SPORTS is 3.58 times more volatile than Cisco Systems. It trades about 0.1 of its potential returns per unit of risk. Cisco Systems is currently generating about 0.31 per unit of risk. If you would invest  741.00  in ANTA SPORTS PRODUCT on September 5, 2024 and sell it today you would earn a total of  202.00  from holding ANTA SPORTS PRODUCT or generate 27.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

ANTA SPORTS PRODUCT  vs.  Cisco Systems

 Performance 
       Timeline  
ANTA SPORTS PRODUCT 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in ANTA SPORTS PRODUCT are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, ANTA SPORTS exhibited solid returns over the last few months and may actually be approaching a breakup point.
Cisco Systems 

Risk-Adjusted Performance

24 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Cisco Systems reported solid returns over the last few months and may actually be approaching a breakup point.

ANTA SPORTS and Cisco Systems Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ANTA SPORTS and Cisco Systems

The main advantage of trading using opposite ANTA SPORTS and Cisco Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ANTA SPORTS position performs unexpectedly, Cisco Systems 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 Cisco Systems will offset losses from the drop in Cisco Systems' long position.
The idea behind ANTA SPORTS PRODUCT and Cisco Systems 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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