Correlation Between OracleJapan and ANTA Sports

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

By analyzing existing cross correlation between Oracle Japan and ANTA Sports Products, you can compare the effects of market volatilities on OracleJapan 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 OracleJapan with a short position of ANTA Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of OracleJapan and ANTA Sports.

Diversification Opportunities for OracleJapan and ANTA Sports

-0.27

Correlation Coefficient

OracleJapan  ANTA Sports

Very good diversification

The 3 months correlation between OracleJapan and ANTA is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Oracle Japan and ANTA Sports Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANTA Sports Products and OracleJapan 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 Oracle Japan 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 Products has no effect on the direction of OracleJapan i.e., OracleJapan and ANTA Sports go up and down completely randomly.

Pair Corralation between OracleJapan and ANTA Sports

Assuming the 90 days horizon OracleJapan is expected to generate 10.45 times less return on investment than ANTA Sports. But when comparing it to its historical volatility, Oracle Japan is 1.14 times less risky than ANTA Sports. It trades about 0.01 of its potential returns per unit of risk. ANTA Sports Products is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  982.00  in ANTA Sports Products on December 21, 2024 and sell it today you would earn a total of  106.00  from holding ANTA Sports Products or generate 10.79% return on investment over 90 days.

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

Oracle Japan  vs.  ANTA Sports Products

Oracle Japan

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oracle Japan has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, OracleJapan is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ANTA Sports Products

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ANTA Sports Products are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, ANTA Sports may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with OracleJapan and ANTA Sports

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

The idea behind Oracle Japan and ANTA Sports Products 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.

Check out your portfolio center.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.