Correlation Between MidCap Financial and ANTA Sports

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

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

Diversification Opportunities for MidCap Financial and ANTA Sports

-0.71

Correlation Coefficient

MidCap Financial  ANTA Sports

Pay attention - limited upside

The 3 months correlation between MidCap and ANTA is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding MidCap Financial Investment 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 MidCap Financial 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 MidCap Financial Investment 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 MidCap Financial i.e., MidCap Financial and ANTA Sports go up and down completely randomly.

Pair Corralation between MidCap Financial and ANTA Sports

Assuming the 90 days trading horizon MidCap Financial Investment is expected to generate 0.39 times more return on investment than ANTA Sports. However, MidCap Financial Investment is 2.55 times less risky than ANTA Sports. It trades about 0.12 of its potential returns per unit of risk. ANTA Sports Products is currently generating about -0.11 per unit of risk. If you would invest  1,187  in MidCap Financial Investment on October 11, 2024 and sell it today you would earn a total of  90.00  from holding MidCap Financial Investment or generate 7.58% return on investment over 90 days.

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

MidCap Financial Investment  vs.  ANTA Sports Products

MidCap Financial Inv

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MidCap Financial Investment are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, MidCap Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with MidCap Financial and ANTA Sports

The main advantage of trading using opposite MidCap Financial and ANTA Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MidCap Financial 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 MidCap Financial Investment 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.