Correlation Between DICKS Sporting and CHINA STATE

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

By analyzing existing cross correlation between DICKS Sporting Goods and CHINA STATE STRU, you can compare the effects of market volatilities on DICKS Sporting and CHINA STATE 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 DICKS Sporting with a short position of CHINA STATE. Check out your portfolio center. Please also check ongoing floating volatility patterns of DICKS Sporting and CHINA STATE.

Diversification Opportunities for DICKS Sporting and CHINA STATE

0.0

Correlation Coefficient

DICKS Sporting  CHINA STATE

Pay attention - limited upside

The 3 months correlation between DICKS and CHINA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding DICKS Sporting Goods and CHINA STATE STRU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA STATE STRU and DICKS Sporting 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 DICKS Sporting Goods are associated (or correlated) with CHINA STATE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA STATE STRU has no effect on the direction of DICKS Sporting i.e., DICKS Sporting and CHINA STATE go up and down completely randomly.

Pair Corralation between DICKS Sporting and CHINA STATE

If you would invest  20,665  in DICKS Sporting Goods on October 21, 2024 and sell it today you would earn a total of  1,425  from holding DICKS Sporting Goods or generate 6.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	5.88%
Values	Daily Returns

DICKS Sporting Goods  vs.  CHINA STATE STRU

DICKS Sporting Goods

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DICKS Sporting Goods are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DICKS Sporting reported solid returns over the last few months and may actually be approaching a breakup point.

CHINA STATE STRU

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHINA STATE STRU has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, CHINA STATE is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with DICKS Sporting and CHINA STATE

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

The idea behind DICKS Sporting Goods and CHINA STATE STRU 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.