Correlation Between Carnival Plc and ANTA Sports

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

By analyzing existing cross correlation between Carnival Plc ADS and ANTA Sports Products, you can compare the effects of market volatilities on Carnival Plc 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 Carnival Plc with a short position of ANTA Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnival Plc and ANTA Sports.

Diversification Opportunities for Carnival Plc and ANTA Sports

0.38

Correlation Coefficient

Carnival Plc  ANTA Sports

Weak diversification

The 3 months correlation between Carnival and ANTA is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Carnival Plc ADS and ANTA Sports Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANTA Sports Products and Carnival Plc 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 Carnival Plc ADS 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 Products has no effect on the direction of Carnival Plc i.e., Carnival Plc and ANTA Sports go up and down completely randomly.

Pair Corralation between Carnival Plc and ANTA Sports

Considering the 90-day investment horizon Carnival Plc ADS is expected to under-perform the ANTA Sports. But the stock apears to be less risky and, when comparing its historical volatility, Carnival Plc ADS is 1.01 times less risky than ANTA Sports. The stock trades about -0.03 of its potential returns per unit of risk. The ANTA Sports Products is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  25,100  in ANTA Sports Products on November 28, 2024 and sell it today you would earn a total of  2,071  from holding ANTA Sports Products or generate 8.25% return on investment over 90 days.

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

Carnival Plc ADS  vs.  ANTA Sports Products

Carnival Plc ADS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carnival Plc ADS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Carnival Plc is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

ANTA Sports Products

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ANTA Sports Products are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, ANTA Sports may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Carnival Plc and ANTA Sports

The main advantage of trading using opposite Carnival Plc and ANTA Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carnival Plc 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' long position.

The idea behind Carnival Plc ADS and ANTA Sports Products 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.