Correlation Between Big 5 and ANTA SPORTS

Can any of the company-specific risk be diversified away by investing in both Big 5 and ANTA SPORTS 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 Big 5 and ANTA SPORTS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Big 5 Sporting and ANTA SPORTS PRODUCT, you can compare the effects of market volatilities on Big 5 and ANTA SPORTS 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 Big 5 with a short position of ANTA SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big 5 and ANTA SPORTS.

Diversification Opportunities for Big 5 and ANTA SPORTS

0.23

Correlation Coefficient

Big 5  ANTA SPORTS

Modest diversification

The 3 months correlation between Big and ANTA is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Big 5 Sporting and ANTA SPORTS PRODUCT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANTA SPORTS PRODUCT and Big 5 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 Big 5 Sporting are associated (or correlated) with ANTA SPORTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANTA SPORTS PRODUCT has no effect on the direction of Big 5 i.e., Big 5 and ANTA SPORTS go up and down completely randomly.

Pair Corralation between Big 5 and ANTA SPORTS

Assuming the 90 days horizon Big 5 is expected to generate 65.27 times less return on investment than ANTA SPORTS. But when comparing it to its historical volatility, Big 5 Sporting is 1.08 times less risky than ANTA SPORTS. It trades about 0.0 of its potential returns per unit of risk. ANTA SPORTS PRODUCT is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  806.00  in ANTA SPORTS PRODUCT on September 13, 2024 and sell it today you would earn a total of  196.00  from holding ANTA SPORTS PRODUCT or generate 24.32% return on investment over 90 days.

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

Big 5 Sporting  vs.  ANTA SPORTS PRODUCT

Big 5 Sporting

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Big 5 Sporting has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Big 5 is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ANTA SPORTS PRODUCT

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ANTA SPORTS PRODUCT are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, ANTA SPORTS exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Big 5 and ANTA SPORTS

The main advantage of trading using opposite Big 5 and ANTA SPORTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big 5 position performs unexpectedly, ANTA SPORTS 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 ANTA SPORTS will offset losses from the drop in ANTA SPORTS's long position.

The idea behind Big 5 Sporting and ANTA SPORTS PRODUCT 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.