Correlation Between ANTA SPORTS and Volkswagen

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

Diversification Opportunities for ANTA SPORTS and Volkswagen

0.56

Correlation Coefficient

ANTA SPORTS  Volkswagen

Very weak diversification

The 3 months correlation between ANTA and Volkswagen is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding ANTA SPORTS PRODUCT and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG 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 Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG has no effect on the direction of ANTA SPORTS i.e., ANTA SPORTS and Volkswagen go up and down completely randomly.

Pair Corralation between ANTA SPORTS and Volkswagen

Assuming the 90 days trading horizon ANTA SPORTS PRODUCT is expected to generate 2.17 times more return on investment than Volkswagen. However, ANTA SPORTS is 2.17 times more volatile than Volkswagen AG. It trades about -0.02 of its potential returns per unit of risk. Volkswagen AG is currently generating about -0.08 per unit of risk. If you would invest  1,040  in ANTA SPORTS PRODUCT on September 27, 2024 and sell it today you would lose (58.00) from holding ANTA SPORTS PRODUCT or give up 5.58% of portfolio value over 90 days.

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

ANTA SPORTS PRODUCT  vs.  Volkswagen AG

ANTA SPORTS PRODUCT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ANTA SPORTS PRODUCT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, ANTA SPORTS is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Volkswagen AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Volkswagen AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with ANTA SPORTS and Volkswagen

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

The idea behind ANTA SPORTS PRODUCT and Volkswagen AG 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.