Correlation Between Adidas AG and Grounded People

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

By analyzing existing cross correlation between Adidas AG ADR and Grounded People Apparel, you can compare the effects of market volatilities on Adidas AG and Grounded People 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 Grounded People. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adidas AG and Grounded People.

Diversification Opportunities for Adidas AG and Grounded People

0.0

Correlation Coefficient

Adidas AG  Grounded People

Pay attention - limited upside

The 3 months correlation between Adidas and Grounded is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Adidas AG ADR and Grounded People Apparel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grounded People Apparel 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 ADR are associated (or correlated) with Grounded People. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grounded People Apparel has no effect on the direction of Adidas AG i.e., Adidas AG and Grounded People go up and down completely randomly.

Pair Corralation between Adidas AG and Grounded People

If you would invest  12,243  in Adidas AG ADR on October 23, 2024 and sell it today you would earn a total of  971.00  from holding Adidas AG ADR or generate 7.93% return on investment over 90 days.

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

Adidas AG ADR  vs.  Grounded People Apparel

Adidas AG ADR

Risk-Adjusted Performance

9 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Adidas AG ADR are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Adidas AG showed solid returns over the last few months and may actually be approaching a breakup point.

Grounded People Apparel

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Adidas AG and Grounded People

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

The idea behind Adidas AG ADR and Grounded People 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.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.