Correlation Between Crocs and Asics Corp

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

By analyzing existing cross correlation between Crocs Inc and Asics Corp ADR, you can compare the effects of market volatilities on Crocs and Asics Corp 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 Crocs with a short position of Asics Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crocs and Asics Corp.

Diversification Opportunities for Crocs and Asics Corp

0.64

Correlation Coefficient

Crocs  Asics Corp

Poor diversification

The 3 months correlation between Crocs and Asics is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Crocs Inc and Asics Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asics Corp ADR and Crocs 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 Crocs Inc are associated (or correlated) with Asics Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asics Corp ADR has no effect on the direction of Crocs i.e., Crocs and Asics Corp go up and down completely randomly.

Pair Corralation between Crocs and Asics Corp

Given the investment horizon of 90 days Crocs Inc is expected to under-perform the Asics Corp. In addition to that, Crocs is 1.37 times more volatile than Asics Corp ADR. It trades about -0.12 of its total potential returns per unit of risk. Asics Corp ADR is currently generating about 0.01 per unit of volatility. If you would invest  1,966  in Asics Corp ADR on August 31, 2024 and sell it today you would lose (4.00) from holding Asics Corp ADR or give up 0.2% of portfolio value over 90 days.

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

Crocs Inc  vs.  Asics Corp ADR

Crocs Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crocs Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Asics Corp ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asics Corp ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Asics Corp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Crocs and Asics Corp

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

The idea behind Crocs Inc and Asics Corp ADR 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.