Correlation Between ANTA Sports and Cadence Design

Can any of the company-specific risk be diversified away by investing in both ANTA Sports and Cadence Design 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 Cadence Design 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 Cadence Design Systems, you can compare the effects of market volatilities on ANTA Sports and Cadence Design 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 Cadence Design. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANTA Sports and Cadence Design.

Diversification Opportunities for ANTA Sports and Cadence Design

-0.68

Correlation Coefficient

ANTA Sports  Cadence Design

Excellent diversification

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

Pair Corralation between ANTA Sports and Cadence Design

Assuming the 90 days horizon ANTA Sports Products is expected to generate 0.82 times more return on investment than Cadence Design. However, ANTA Sports Products is 1.21 times less risky than Cadence Design. It trades about 0.2 of its potential returns per unit of risk. Cadence Design Systems is currently generating about -0.09 per unit of risk. If you would invest  25,960  in ANTA Sports Products on December 20, 2024 and sell it today you would earn a total of  6,790  from holding ANTA Sports Products or generate 26.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

ANTA Sports Products  vs.  Cadence Design Systems

ANTA Sports Products

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ANTA Sports Products are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, ANTA Sports showed solid returns over the last few months and may actually be approaching a breakup point.

Cadence Design Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cadence Design Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with ANTA Sports and Cadence Design

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

The idea behind ANTA Sports Products and Cadence Design Systems 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.