Correlation Between Skechers USA and ANTA Sports

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

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

Diversification Opportunities for Skechers USA and ANTA Sports

0.0

Correlation Coefficient

Skechers USA  ANTA Sports

Pay attention - limited upside

The 3 months correlation between Skechers and ANTA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Skechers USA 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 Skechers USA 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 Skechers USA 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 Skechers USA i.e., Skechers USA and ANTA Sports go up and down completely randomly.

Pair Corralation between Skechers USA and ANTA Sports

Considering the 90-day investment horizon Skechers USA is expected to generate 2.99 times less return on investment than ANTA Sports. But when comparing it to its historical volatility, Skechers USA is 1.58 times less risky than ANTA Sports. It trades about 0.02 of its potential returns per unit of risk. ANTA Sports Products is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  21,732  in ANTA Sports Products on October 8, 2024 and sell it today you would earn a total of  2,805  from holding ANTA Sports Products or generate 12.91% return on investment over 90 days.

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

Skechers USA  vs.  ANTA Sports Products

Skechers USA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Skechers USA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward-looking signals, Skechers USA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

ANTA Sports Products

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ANTA Sports Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Skechers USA and ANTA Sports

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

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.