Correlation Between Good Vibrations and ASICS

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

By analyzing existing cross correlation between Good Vibrations Shoes and ASICS, you can compare the effects of market volatilities on Good Vibrations and ASICS 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 Good Vibrations with a short position of ASICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Good Vibrations and ASICS.

Diversification Opportunities for Good Vibrations and ASICS

0.03

Correlation Coefficient

Good Vibrations  ASICS

Significant diversification

The 3 months correlation between Good and ASICS is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Good Vibrations Shoes and ASICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASICS and Good Vibrations 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 Good Vibrations Shoes are associated (or correlated) with ASICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASICS has no effect on the direction of Good Vibrations i.e., Good Vibrations and ASICS go up and down completely randomly.

Pair Corralation between Good Vibrations and ASICS

Given the investment horizon of 90 days Good Vibrations Shoes is expected to generate 1.75 times more return on investment than ASICS. However, Good Vibrations is 1.75 times more volatile than ASICS. It trades about 0.04 of its potential returns per unit of risk. ASICS is currently generating about 0.06 per unit of risk. If you would invest  0.35  in Good Vibrations Shoes on December 28, 2024 and sell it today you would lose (0.02) from holding Good Vibrations Shoes or give up 5.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.67%
Values	Daily Returns

Good Vibrations Shoes  vs.  ASICS

Good Vibrations Shoes

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Good Vibrations Shoes are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, Good Vibrations demonstrated solid returns over the last few months and may actually be approaching a breakup point.

ASICS

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ASICS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal fundamental indicators, ASICS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Good Vibrations and ASICS

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

The idea behind Good Vibrations Shoes and ASICS 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.