Correlation Between Northstar Clean and ANTA Sports

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

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

Diversification Opportunities for Northstar Clean and ANTA Sports

-0.59

Correlation Coefficient

Northstar Clean  ANTA Sports

Excellent diversification

The 3 months correlation between Northstar and ANTA is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Northstar Clean Technologies 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 Northstar Clean 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 Northstar Clean Technologies 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 Northstar Clean i.e., Northstar Clean and ANTA Sports go up and down completely randomly.

Pair Corralation between Northstar Clean and ANTA Sports

Assuming the 90 days horizon Northstar Clean Technologies is expected to generate 0.92 times more return on investment than ANTA Sports. However, Northstar Clean Technologies is 1.08 times less risky than ANTA Sports. It trades about 0.21 of its potential returns per unit of risk. ANTA Sports Products is currently generating about 0.04 per unit of risk. If you would invest  15.00  in Northstar Clean Technologies on September 25, 2024 and sell it today you would earn a total of  9.00  from holding Northstar Clean Technologies or generate 60.0% return on investment over 90 days.

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

Northstar Clean Technologies  vs.  ANTA Sports Products

Northstar Clean Tech

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Northstar Clean Technologies are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Northstar Clean reported solid returns over the last few months and may actually be approaching a breakup point.

ANTA Sports Products

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ANTA Sports Products are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, ANTA Sports may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Northstar Clean and ANTA Sports

The main advantage of trading using opposite Northstar Clean and ANTA Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northstar Clean 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 Northstar Clean Technologies 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.