Correlation Between ANTA Sports and Borealis Foods

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

By analyzing existing cross correlation between ANTA Sports Products and Borealis Foods, you can compare the effects of market volatilities on ANTA Sports and Borealis Foods 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 ANTA Sports with a short position of Borealis Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANTA Sports and Borealis Foods.

Diversification Opportunities for ANTA Sports and Borealis Foods

-0.48

Correlation Coefficient

ANTA Sports  Borealis Foods

Very good diversification

The 3 months correlation between ANTA and Borealis is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding ANTA Sports Products and Borealis Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borealis Foods and ANTA 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 ANTA Sports Products are associated (or correlated) with Borealis Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Borealis Foods has no effect on the direction of ANTA Sports i.e., ANTA Sports and Borealis Foods go up and down completely randomly.

Pair Corralation between ANTA Sports and Borealis Foods

Assuming the 90 days horizon ANTA Sports is expected to generate 27.97 times less return on investment than Borealis Foods. But when comparing it to its historical volatility, ANTA Sports Products is 1.63 times less risky than Borealis Foods. It trades about 0.01 of its potential returns per unit of risk. Borealis Foods is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  6.46  in Borealis Foods on October 24, 2024 and sell it today you would earn a total of  4.54  from holding Borealis Foods or generate 70.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.83%
Values	Daily Returns

ANTA Sports Products  vs.  Borealis Foods

ANTA Sports Products

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ANTA Sports Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, ANTA Sports is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Borealis Foods

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Borealis Foods are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Borealis Foods showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ANTA Sports and Borealis Foods

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

The idea behind ANTA Sports Products and Borealis Foods 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.