Correlation Between Sports Gear and Est Global

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

By analyzing existing cross correlation between Sports Gear Co and Est Global Apparel, you can compare the effects of market volatilities on Sports Gear and Est Global 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 Sports Gear with a short position of Est Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sports Gear and Est Global.

Diversification Opportunities for Sports Gear and Est Global

-0.09

Correlation Coefficient

Sports Gear  Est Global

Good diversification

The 3 months correlation between Sports and Est is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Sports Gear Co and Est Global Apparel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Est Global Apparel and Sports Gear 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 Sports Gear Co are associated (or correlated) with Est Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Est Global Apparel has no effect on the direction of Sports Gear i.e., Sports Gear and Est Global go up and down completely randomly.

Pair Corralation between Sports Gear and Est Global

Assuming the 90 days trading horizon Sports Gear Co is expected to under-perform the Est Global. But the stock apears to be less risky and, when comparing its historical volatility, Sports Gear Co is 1.21 times less risky than Est Global. The stock trades about -0.09 of its potential returns per unit of risk. The Est Global Apparel is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,735  in Est Global Apparel on September 17, 2024 and sell it today you would earn a total of  60.00  from holding Est Global Apparel or generate 3.46% return on investment over 90 days.

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

Sports Gear Co  vs.  Est Global Apparel

Sports Gear

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sports Gear Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sports Gear showed solid returns over the last few months and may actually be approaching a breakup point.

Est Global Apparel

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Est Global Apparel are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Est Global is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Sports Gear and Est Global

The main advantage of trading using opposite Sports Gear and Est Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sports Gear position performs unexpectedly, Est Global 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 Est Global will offset losses from the drop in Est Global's long position.

The idea behind Sports Gear Co and Est Global Apparel 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.