Correlation Between Sportsmans and Olaplex Holdings

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

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

Diversification Opportunities for Sportsmans and Olaplex Holdings

0.27

Correlation Coefficient

Sportsmans  Olaplex Holdings

Modest diversification

The 3 months correlation between Sportsmans and Olaplex is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Sportsmans and Olaplex Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olaplex Holdings and Sportsmans 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 Sportsmans are associated (or correlated) with Olaplex Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olaplex Holdings has no effect on the direction of Sportsmans i.e., Sportsmans and Olaplex Holdings go up and down completely randomly.

Pair Corralation between Sportsmans and Olaplex Holdings

Given the investment horizon of 90 days Sportsmans is expected to generate 2.68 times more return on investment than Olaplex Holdings. However, Sportsmans is 2.68 times more volatile than Olaplex Holdings. It trades about 0.16 of its potential returns per unit of risk. Olaplex Holdings is currently generating about -0.4 per unit of risk. If you would invest  219.00  in Sportsmans on October 5, 2024 and sell it today you would earn a total of  38.00  from holding Sportsmans or generate 17.35% return on investment over 90 days.

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

Sportsmans  vs.  Olaplex Holdings

Sportsmans

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sportsmans has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Sportsmans is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Olaplex Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Olaplex Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic 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 Sportsmans and Olaplex Holdings

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

The idea behind Sportsmans and Olaplex Holdings 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.