Correlation Between Dairy Farm and ANTA SPORTS

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

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

Diversification Opportunities for Dairy Farm and ANTA SPORTS

-0.02

Correlation Coefficient

Dairy Farm  ANTA SPORTS

Good diversification

The 3 months correlation between Dairy and ANTA is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Dairy Farm International 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 Dairy Farm 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 Dairy Farm International 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 Dairy Farm i.e., Dairy Farm and ANTA SPORTS go up and down completely randomly.

Pair Corralation between Dairy Farm and ANTA SPORTS

Assuming the 90 days trading horizon Dairy Farm International is expected to under-perform the ANTA SPORTS. But the stock apears to be less risky and, when comparing its historical volatility, Dairy Farm International is 1.35 times less risky than ANTA SPORTS. The stock trades about -0.03 of its potential returns per unit of risk. The ANTA SPORTS PRODUCT is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  963.00  in ANTA SPORTS PRODUCT on September 19, 2024 and sell it today you would earn a total of  20.00  from holding ANTA SPORTS PRODUCT or generate 2.08% return on investment over 90 days.

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

Dairy Farm International  vs.  ANTA SPORTS PRODUCT

Dairy Farm International

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dairy Farm International are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Dairy Farm reported solid returns over the last few months and may actually be approaching a breakup point.

ANTA SPORTS PRODUCT

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ANTA SPORTS PRODUCT are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, ANTA SPORTS exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dairy Farm and ANTA SPORTS

The main advantage of trading using opposite Dairy Farm and ANTA SPORTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dairy Farm 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 Dairy Farm International 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.