Correlation Between Deckers Outdoor and Asics Corp

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

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

Diversification Opportunities for Deckers Outdoor and Asics Corp

-0.35

Correlation Coefficient

Deckers Outdoor  Asics Corp

Very good diversification

The 3 months correlation between Deckers and Asics is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Deckers Outdoor 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 Deckers Outdoor 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 Deckers Outdoor 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 Deckers Outdoor i.e., Deckers Outdoor and Asics Corp go up and down completely randomly.

Pair Corralation between Deckers Outdoor and Asics Corp

Given the investment horizon of 90 days Deckers Outdoor is expected to under-perform the Asics Corp. In addition to that, Deckers Outdoor is 1.33 times more volatile than Asics Corp ADR. It trades about -0.27 of its total potential returns per unit of risk. Asics Corp ADR is currently generating about 0.07 per unit of volatility. If you would invest  1,961  in Asics Corp ADR on December 29, 2024 and sell it today you would earn a total of  192.00  from holding Asics Corp ADR or generate 9.79% return on investment over 90 days.

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

Deckers Outdoor  vs.  Asics Corp ADR

Deckers Outdoor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Deckers Outdoor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Asics Corp ADR

Risk-Adjusted Performance

Modest

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

Pair Trading with Deckers Outdoor and Asics Corp

The main advantage of trading using opposite Deckers Outdoor and Asics Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deckers Outdoor 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 Deckers Outdoor 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 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.