Correlation Between ANTA SPORTS and IMPERIAL TOBACCO

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

By analyzing existing cross correlation between ANTA SPORTS PRODUCT and IMPERIAL TOBACCO , you can compare the effects of market volatilities on ANTA SPORTS and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANTA SPORTS and IMPERIAL TOBACCO.

Diversification Opportunities for ANTA SPORTS and IMPERIAL TOBACCO

-0.57

Correlation Coefficient

ANTA SPORTS  IMPERIAL TOBACCO

Excellent diversification

The 3 months correlation between ANTA and IMPERIAL is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding ANTA SPORTS PRODUCT and IMPERIAL TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMPERIAL TOBACCO 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 PRODUCT are associated (or correlated) with IMPERIAL TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMPERIAL TOBACCO has no effect on the direction of ANTA SPORTS i.e., ANTA SPORTS and IMPERIAL TOBACCO go up and down completely randomly.

Pair Corralation between ANTA SPORTS and IMPERIAL TOBACCO

Assuming the 90 days trading horizon ANTA SPORTS is expected to generate 1.07 times less return on investment than IMPERIAL TOBACCO. In addition to that, ANTA SPORTS is 2.69 times more volatile than IMPERIAL TOBACCO . It trades about 0.04 of its total potential returns per unit of risk. IMPERIAL TOBACCO is currently generating about 0.12 per unit of volatility. If you would invest  1,833  in IMPERIAL TOBACCO on October 24, 2024 and sell it today you would earn a total of  1,238  from holding IMPERIAL TOBACCO or generate 67.54% return on investment over 90 days.

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

ANTA SPORTS PRODUCT  vs.  IMPERIAL TOBACCO

ANTA SPORTS PRODUCT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ANTA SPORTS PRODUCT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, ANTA SPORTS is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

IMPERIAL TOBACCO

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in IMPERIAL TOBACCO are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental drivers, IMPERIAL TOBACCO unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ANTA SPORTS and IMPERIAL TOBACCO

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

The idea behind ANTA SPORTS PRODUCT and IMPERIAL TOBACCO 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.