Correlation Between ANT and Soft World

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

By analyzing existing cross correlation between ANT and Soft World International, you can compare the effects of market volatilities on ANT and Soft World 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 ANT with a short position of Soft World. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANT and Soft World.

Diversification Opportunities for ANT and Soft World

0.2

Correlation Coefficient

ANT  Soft World

Modest diversification

The 3 months correlation between ANT and Soft is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding ANT and Soft World International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soft World International and ANT 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 ANT are associated (or correlated) with Soft World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soft World International has no effect on the direction of ANT i.e., ANT and Soft World go up and down completely randomly.

Pair Corralation between ANT and Soft World

Assuming the 90 days trading horizon ANT is expected to generate 37.72 times more return on investment than Soft World. However, ANT is 37.72 times more volatile than Soft World International. It trades about 0.17 of its potential returns per unit of risk. Soft World International is currently generating about -0.05 per unit of risk. If you would invest  147.00  in ANT on October 26, 2024 and sell it today you would earn a total of  0.00  from holding ANT or generate 0.0% return on investment over 90 days.

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

ANT  vs.  Soft World International

ANT

Risk-Adjusted Performance

13 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ANT are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, ANT exhibited solid returns over the last few months and may actually be approaching a breakup point.

Soft World International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Soft World International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Soft World is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with ANT and Soft World

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

The idea behind ANT and Soft World International 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.