Correlation Between USWE SPORTS and Kering SA

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

By analyzing existing cross correlation between USWE SPORTS AB and Kering SA, you can compare the effects of market volatilities on USWE SPORTS and Kering SA 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 USWE SPORTS with a short position of Kering SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of USWE SPORTS and Kering SA.

Diversification Opportunities for USWE SPORTS and Kering SA

-0.54

Correlation Coefficient

USWE SPORTS  Kering SA

Excellent diversification

The 3 months correlation between USWE and Kering is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding USWE SPORTS AB and Kering SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kering SA and USWE SPORTS 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 USWE SPORTS AB are associated (or correlated) with Kering SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kering SA has no effect on the direction of USWE SPORTS i.e., USWE SPORTS and Kering SA go up and down completely randomly.

Pair Corralation between USWE SPORTS and Kering SA

Assuming the 90 days horizon USWE SPORTS AB is expected to generate 1.17 times more return on investment than Kering SA. However, USWE SPORTS is 1.17 times more volatile than Kering SA. It trades about 0.13 of its potential returns per unit of risk. Kering SA is currently generating about -0.02 per unit of risk. If you would invest  58.00  in USWE SPORTS AB on September 26, 2024 and sell it today you would earn a total of  15.00  from holding USWE SPORTS AB or generate 25.86% return on investment over 90 days.

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

USWE SPORTS AB  vs.  Kering SA

USWE SPORTS AB

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in USWE SPORTS AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, USWE SPORTS reported solid returns over the last few months and may actually be approaching a breakup point.

Kering SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kering SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Kering SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with USWE SPORTS and Kering SA

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

The idea behind USWE SPORTS AB and Kering SA 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.