Correlation Between Amer Sports, and American Outdoor

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Can any of the company-specific risk be diversified away by investing in both Amer Sports, and American Outdoor 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 Amer Sports, and American Outdoor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amer Sports, and American Outdoor Brands, you can compare the effects of market volatilities on Amer Sports, and American Outdoor 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 Amer Sports, with a short position of American Outdoor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amer Sports, and American Outdoor.

Diversification Opportunities for Amer Sports, and American Outdoor

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Amer and American is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Amer Sports, and American Outdoor Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Outdoor Brands and Amer 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 Amer Sports, are associated (or correlated) with American Outdoor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Outdoor Brands has no effect on the direction of Amer Sports, i.e., Amer Sports, and American Outdoor go up and down completely randomly.

Pair Corralation between Amer Sports, and American Outdoor

Allowing for the 90-day total investment horizon Amer Sports, is expected to generate 4.38 times less return on investment than American Outdoor. But when comparing it to its historical volatility, Amer Sports, is 2.51 times less risky than American Outdoor. It trades about 0.27 of its potential returns per unit of risk. American Outdoor Brands is currently generating about 0.46 of returns per unit of risk over similar time horizon. If you would invest  975.00  in American Outdoor Brands on September 28, 2024 and sell it today you would earn a total of  565.00  from holding American Outdoor Brands or generate 57.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Amer Sports,  vs.  American Outdoor Brands

 Performance 
       Timeline  
Amer Sports, 

Risk-Adjusted Performance

24 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Amer Sports, are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Amer Sports, unveiled solid returns over the last few months and may actually be approaching a breakup point.
American Outdoor Brands 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in American Outdoor Brands are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, American Outdoor unveiled solid returns over the last few months and may actually be approaching a breakup point.

Amer Sports, and American Outdoor Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amer Sports, and American Outdoor

The main advantage of trading using opposite Amer Sports, and American Outdoor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amer Sports, position performs unexpectedly, American Outdoor 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 American Outdoor will offset losses from the drop in American Outdoor's long position.
The idea behind Amer Sports, and American Outdoor Brands 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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