Correlation Between Artistic Denim and Fateh Sports

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

By analyzing existing cross correlation between Artistic Denim Mills and Fateh Sports Wear, you can compare the effects of market volatilities on Artistic Denim and Fateh Sports 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 Artistic Denim with a short position of Fateh Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Artistic Denim and Fateh Sports.

Diversification Opportunities for Artistic Denim and Fateh Sports

0.44

Correlation Coefficient

Artistic Denim  Fateh Sports

Very weak diversification

The 3 months correlation between Artistic and Fateh is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Artistic Denim Mills and Fateh Sports Wear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fateh Sports Wear and Artistic Denim 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 Artistic Denim Mills are associated (or correlated) with Fateh Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fateh Sports Wear has no effect on the direction of Artistic Denim i.e., Artistic Denim and Fateh Sports go up and down completely randomly.

Pair Corralation between Artistic Denim and Fateh Sports

Assuming the 90 days trading horizon Artistic Denim is expected to generate 1.71 times less return on investment than Fateh Sports. But when comparing it to its historical volatility, Artistic Denim Mills is 2.05 times less risky than Fateh Sports. It trades about 0.03 of its potential returns per unit of risk. Fateh Sports Wear is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  8,828  in Fateh Sports Wear on September 29, 2024 and sell it today you would lose (106.00) from holding Fateh Sports Wear or give up 1.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	45.6%
Values	Daily Returns

Artistic Denim Mills  vs.  Fateh Sports Wear

Artistic Denim Mills

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Artistic Denim Mills are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Artistic Denim sustained solid returns over the last few months and may actually be approaching a breakup point.

Fateh Sports Wear

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fateh Sports Wear has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Artistic Denim and Fateh Sports

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

The idea behind Artistic Denim Mills and Fateh Sports Wear 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 Stocks Directory module to find actively traded stocks across global markets.