Correlation Between Seadrill and ANTA Sports

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

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

Diversification Opportunities for Seadrill and ANTA Sports

0.01

Correlation Coefficient

Seadrill  ANTA Sports

Significant diversification

The 3 months correlation between Seadrill and ANTA is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Seadrill Limited 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 Seadrill 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 Seadrill Limited 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 Seadrill i.e., Seadrill and ANTA Sports go up and down completely randomly.

Pair Corralation between Seadrill and ANTA Sports

Given the investment horizon of 90 days Seadrill Limited is expected to generate 0.7 times more return on investment than ANTA Sports. However, Seadrill Limited is 1.43 times less risky than ANTA Sports. It trades about -0.04 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  3,974  in Seadrill Limited on September 30, 2024 and sell it today you would lose (314.00) from holding Seadrill Limited or give up 7.9% of portfolio value over 90 days.

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

Seadrill Limited  vs.  ANTA Sports Products

Seadrill Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seadrill Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

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 Seadrill and ANTA Sports

The main advantage of trading using opposite Seadrill and ANTA Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seadrill 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 Seadrill Limited 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..