Correlation Between Dr Martens and ASICS

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

By analyzing existing cross correlation between Dr Martens plc and ASICS, you can compare the effects of market volatilities on Dr Martens and ASICS 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 Dr Martens with a short position of ASICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dr Martens and ASICS.

Diversification Opportunities for Dr Martens and ASICS

-0.34

Correlation Coefficient

Dr Martens  ASICS

Very good diversification

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

Pair Corralation between Dr Martens and ASICS

Assuming the 90 days horizon Dr Martens plc is expected to generate 1.76 times more return on investment than ASICS. However, Dr Martens is 1.76 times more volatile than ASICS. It trades about 0.07 of its potential returns per unit of risk. ASICS is currently generating about -0.12 per unit of risk. If you would invest  87.00  in Dr Martens plc on September 17, 2024 and sell it today you would earn a total of  12.00  from holding Dr Martens plc or generate 13.79% return on investment over 90 days.

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

Dr Martens plc  vs.  ASICS

Dr Martens plc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dr Martens plc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal primary indicators, Dr Martens reported solid returns over the last few months and may actually be approaching a breakup point.

ASICS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASICS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Dr Martens and ASICS

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

The idea behind Dr Martens plc and ASICS 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.