Correlation Between Royal Caribbean and ANTA Sports

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

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

Diversification Opportunities for Royal Caribbean and ANTA Sports

-0.31

Correlation Coefficient

Royal Caribbean  ANTA Sports

Very good diversification

The 3 months correlation between Royal and ANTA is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Royal Caribbean Group 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 Royal Caribbean 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 Royal Caribbean Group 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 Royal Caribbean i.e., Royal Caribbean and ANTA Sports go up and down completely randomly.

Pair Corralation between Royal Caribbean and ANTA Sports

Assuming the 90 days horizon Royal Caribbean Group is expected to generate 0.51 times more return on investment than ANTA Sports. However, Royal Caribbean Group is 1.95 times less risky than ANTA Sports. It trades about 0.29 of its potential returns per unit of risk. ANTA Sports Products is currently generating about 0.07 per unit of risk. If you would invest  15,806  in Royal Caribbean Group on September 23, 2024 and sell it today you would earn a total of  7,214  from holding Royal Caribbean Group or generate 45.64% return on investment over 90 days.

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

Royal Caribbean Group  vs.  ANTA Sports Products

Royal Caribbean Group

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Royal Caribbean Group are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Royal Caribbean reported solid returns over the last few months and may actually be approaching a breakup point.

ANTA Sports Products

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with Royal Caribbean and ANTA Sports

The main advantage of trading using opposite Royal Caribbean and ANTA Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Caribbean 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 Royal Caribbean Group 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.