Correlation Between Adidas AG and Asics Corp

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

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

Diversification Opportunities for Adidas AG and Asics Corp

0.63

Correlation Coefficient

Adidas AG  Asics Corp

Poor diversification

The 3 months correlation between Adidas and Asics is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Adidas AG and Asics Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asics Corp ADR and Adidas AG 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 Adidas AG are associated (or correlated) with Asics Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asics Corp ADR has no effect on the direction of Adidas AG i.e., Adidas AG and Asics Corp go up and down completely randomly.

Pair Corralation between Adidas AG and Asics Corp

Assuming the 90 days horizon Adidas AG is expected to under-perform the Asics Corp. But the otc stock apears to be less risky and, when comparing its historical volatility, Adidas AG is 1.23 times less risky than Asics Corp. The otc stock trades about 0.0 of its potential returns per unit of risk. The Asics Corp ADR is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,961  in Asics Corp ADR on December 29, 2024 and sell it today you would earn a total of  192.00  from holding Asics Corp ADR or generate 9.79% return on investment over 90 days.

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

Adidas AG  vs.  Asics Corp ADR

Adidas AG

Risk-Adjusted Performance

Very Weak

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

Asics Corp ADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Asics Corp ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Asics Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Adidas AG and Asics Corp

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

The idea behind Adidas AG and Asics Corp ADR 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.