Correlation Between Colgate Palmolive and ANTA SPORTS

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

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

Diversification Opportunities for Colgate Palmolive and ANTA SPORTS

0.11

Correlation Coefficient

Colgate Palmolive  ANTA SPORTS

Average diversification

The 3 months correlation between Colgate and ANTA is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Colgate Palmolive and ANTA SPORTS PRODUCT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANTA SPORTS PRODUCT and Colgate Palmolive 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 Colgate Palmolive are associated (or correlated) with ANTA SPORTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANTA SPORTS PRODUCT has no effect on the direction of Colgate Palmolive i.e., Colgate Palmolive and ANTA SPORTS go up and down completely randomly.

Pair Corralation between Colgate Palmolive and ANTA SPORTS

Assuming the 90 days trading horizon Colgate Palmolive is expected to generate 0.42 times more return on investment than ANTA SPORTS. However, Colgate Palmolive is 2.36 times less risky than ANTA SPORTS. It trades about -0.1 of its potential returns per unit of risk. ANTA SPORTS PRODUCT is currently generating about -0.11 per unit of risk. If you would invest  9,134  in Colgate Palmolive on October 9, 2024 and sell it today you would lose (645.00) from holding Colgate Palmolive or give up 7.06% of portfolio value over 90 days.

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

Colgate Palmolive  vs.  ANTA SPORTS PRODUCT

Colgate Palmolive

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Colgate Palmolive has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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 uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Colgate Palmolive and ANTA SPORTS

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

The idea behind Colgate Palmolive and ANTA SPORTS PRODUCT 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.