Correlation Between COPLAND ROAD and Adidas AG

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

By analyzing existing cross correlation between COPLAND ROAD CAPITAL and adidas AG, you can compare the effects of market volatilities on COPLAND ROAD and Adidas AG 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 COPLAND ROAD with a short position of Adidas AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of COPLAND ROAD and Adidas AG.

Diversification Opportunities for COPLAND ROAD and Adidas AG

0.68

Correlation Coefficient

COPLAND ROAD  Adidas AG

Poor diversification

The 3 months correlation between COPLAND and Adidas is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding COPLAND ROAD CAPITAL and adidas AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on adidas AG and COPLAND ROAD 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 COPLAND ROAD CAPITAL are associated (or correlated) with Adidas AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of adidas AG has no effect on the direction of COPLAND ROAD i.e., COPLAND ROAD and Adidas AG go up and down completely randomly.

Pair Corralation between COPLAND ROAD and Adidas AG

Assuming the 90 days horizon COPLAND ROAD CAPITAL is expected to generate 23.51 times more return on investment than Adidas AG. However, COPLAND ROAD is 23.51 times more volatile than adidas AG. It trades about 0.05 of its potential returns per unit of risk. adidas AG is currently generating about 0.06 per unit of risk. If you would invest  15.00  in COPLAND ROAD CAPITAL on October 23, 2024 and sell it today you would earn a total of  5,175  from holding COPLAND ROAD CAPITAL or generate 34500.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

COPLAND ROAD CAPITAL  vs.  adidas AG

COPLAND ROAD CAPITAL

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in COPLAND ROAD CAPITAL are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, COPLAND ROAD reported solid returns over the last few months and may actually be approaching a breakup point.

adidas AG

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in adidas AG are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Adidas AG unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with COPLAND ROAD and Adidas AG

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

The idea behind COPLAND ROAD CAPITAL and adidas AG 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.