Correlation Between NIKE and Agrometal SAI

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

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

Diversification Opportunities for NIKE and Agrometal SAI

-0.67

Correlation Coefficient

NIKE  Agrometal SAI

Excellent diversification

The 3 months correlation between NIKE and Agrometal is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding NIKE Inc and Agrometal SAI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agrometal SAI and NIKE 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 NIKE Inc are associated (or correlated) with Agrometal SAI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agrometal SAI has no effect on the direction of NIKE i.e., NIKE and Agrometal SAI go up and down completely randomly.

Pair Corralation between NIKE and Agrometal SAI

Assuming the 90 days trading horizon NIKE Inc is expected to under-perform the Agrometal SAI. But the stock apears to be less risky and, when comparing its historical volatility, NIKE Inc is 1.44 times less risky than Agrometal SAI. The stock trades about -0.11 of its potential returns per unit of risk. The Agrometal SAI is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  5,690  in Agrometal SAI on September 13, 2024 and sell it today you would earn a total of  1,610  from holding Agrometal SAI or generate 28.3% return on investment over 90 days.

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

NIKE Inc  vs.  Agrometal SAI

NIKE Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NIKE Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Agrometal SAI

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Agrometal SAI are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Agrometal SAI sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NIKE and Agrometal SAI

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

The idea behind NIKE Inc and Agrometal SAI 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.