Correlation Between ANT and Prestige Consumer

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

By analyzing existing cross correlation between ANT and Prestige Consumer Healthcare, you can compare the effects of market volatilities on ANT and Prestige Consumer 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 Prestige Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANT and Prestige Consumer.

Diversification Opportunities for ANT and Prestige Consumer

-0.34

Correlation Coefficient

ANT  Prestige Consumer

Very good diversification

The 3 months correlation between ANT and Prestige is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding ANT and Prestige Consumer Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prestige Consumer 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 Prestige Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prestige Consumer has no effect on the direction of ANT i.e., ANT and Prestige Consumer go up and down completely randomly.

Pair Corralation between ANT and Prestige Consumer

Assuming the 90 days trading horizon ANT is expected to generate 37.82 times more return on investment than Prestige Consumer. However, ANT is 37.82 times more volatile than Prestige Consumer Healthcare. It trades about 0.1 of its potential returns per unit of risk. Prestige Consumer Healthcare is currently generating about 0.03 per unit of risk. If you would invest  298.00  in ANT on October 11, 2024 and sell it today you would lose (151.00) from holding ANT or give up 50.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	59.4%
Values	Daily Returns

ANT  vs.  Prestige Consumer Healthcare

ANT

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ANT are ranked lower than 16 (%) 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.

Prestige Consumer

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prestige Consumer Healthcare are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Prestige Consumer reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ANT and Prestige Consumer

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

The idea behind ANT and Prestige Consumer Healthcare 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.