Correlation Between Puma SE and ASICS

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

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

Diversification Opportunities for Puma SE and ASICS

-0.63

Correlation Coefficient

Puma SE  ASICS

Excellent diversification

The 3 months correlation between Puma and ASICS is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Puma SE and ASICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASICS and Puma SE 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 Puma SE 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 Puma SE i.e., Puma SE and ASICS go up and down completely randomly.

Pair Corralation between Puma SE and ASICS

Assuming the 90 days horizon Puma SE is expected to generate 269.98 times less return on investment than ASICS. But when comparing it to its historical volatility, Puma SE is 19.57 times less risky than ASICS. It trades about 0.01 of its potential returns per unit of risk. ASICS is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,804  in ASICS on August 31, 2024 and sell it today you would lose (1,274) from holding ASICS or give up 45.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	65.59%
Values	Daily Returns

Puma SE  vs.  ASICS

Puma SE

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Puma SE are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Puma SE may actually be approaching a critical reversion point that can send shares even higher in December 2024.

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 nearly stable fundamental indicators, ASICS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Puma SE and ASICS

The main advantage of trading using opposite Puma SE and ASICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Puma SE 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 Puma SE 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.