Correlation Between BANDAI NAMCO and ANTA Sports

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

By analyzing existing cross correlation between BANDAI NAMCO Holdings and ANTA Sports Products, you can compare the effects of market volatilities on BANDAI NAMCO 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 BANDAI NAMCO with a short position of ANTA Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANDAI NAMCO and ANTA Sports.

Diversification Opportunities for BANDAI NAMCO and ANTA Sports

0.58

Correlation Coefficient

BANDAI NAMCO  ANTA Sports

Very weak diversification

The 3 months correlation between BANDAI and ANTA is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding BANDAI NAMCO Holdings and ANTA Sports Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANTA Sports Products and BANDAI NAMCO 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 BANDAI NAMCO Holdings 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 Products has no effect on the direction of BANDAI NAMCO i.e., BANDAI NAMCO and ANTA Sports go up and down completely randomly.

Pair Corralation between BANDAI NAMCO and ANTA Sports

Assuming the 90 days horizon BANDAI NAMCO Holdings is expected to generate 0.52 times more return on investment than ANTA Sports. However, BANDAI NAMCO Holdings is 1.93 times less risky than ANTA Sports. It trades about -0.03 of its potential returns per unit of risk. ANTA Sports Products is currently generating about -0.05 per unit of risk. If you would invest  2,200  in BANDAI NAMCO Holdings on September 29, 2024 and sell it today you would lose (80.00) from holding BANDAI NAMCO Holdings or give up 3.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

BANDAI NAMCO Holdings  vs.  ANTA Sports Products

BANDAI NAMCO Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

ANTA Sports Products

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ANTA Sports Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with BANDAI NAMCO and ANTA Sports

The main advantage of trading using opposite BANDAI NAMCO and ANTA Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANDAI NAMCO 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' long position.

The idea behind BANDAI NAMCO Holdings and ANTA Sports Products 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.