Correlation Between IMPERIAL TOBACCO and ANTA SPORTS

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

By analyzing existing cross correlation between IMPERIAL TOBACCO and ANTA SPORTS PRODUCT, you can compare the effects of market volatilities on IMPERIAL TOBACCO 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 IMPERIAL TOBACCO with a short position of ANTA SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMPERIAL TOBACCO and ANTA SPORTS.

Diversification Opportunities for IMPERIAL TOBACCO and ANTA SPORTS

-0.57

Correlation Coefficient

IMPERIAL TOBACCO  ANTA SPORTS

Excellent diversification

The 3 months correlation between IMPERIAL and ANTA is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding IMPERIAL TOBACCO and ANTA SPORTS PRODUCT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANTA SPORTS PRODUCT and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO 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 PRODUCT has no effect on the direction of IMPERIAL TOBACCO i.e., IMPERIAL TOBACCO and ANTA SPORTS go up and down completely randomly.

Pair Corralation between IMPERIAL TOBACCO and ANTA SPORTS

Assuming the 90 days trading horizon IMPERIAL TOBACCO is expected to generate 0.37 times more return on investment than ANTA SPORTS. However, IMPERIAL TOBACCO is 2.69 times less risky than ANTA SPORTS. It trades about 0.12 of its potential returns per unit of risk. ANTA SPORTS PRODUCT is currently generating about 0.04 per unit of risk. If you would invest  1,833  in IMPERIAL TOBACCO on October 24, 2024 and sell it today you would earn a total of  1,238  from holding IMPERIAL TOBACCO or generate 67.54% return on investment over 90 days.

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

IMPERIAL TOBACCO   vs.  ANTA SPORTS PRODUCT

IMPERIAL TOBACCO

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in IMPERIAL TOBACCO are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental drivers, IMPERIAL TOBACCO unveiled solid returns over the last few months and may actually be approaching a breakup point.

ANTA SPORTS PRODUCT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ANTA SPORTS PRODUCT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, ANTA SPORTS is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with IMPERIAL TOBACCO and ANTA SPORTS

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

The idea behind IMPERIAL TOBACCO and ANTA SPORTS PRODUCT 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..