Correlation Between SIGNA Sports and Polished

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

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

Diversification Opportunities for SIGNA Sports and Polished

-0.33

Correlation Coefficient

SIGNA Sports  Polished

Very good diversification

The 3 months correlation between SIGNA and Polished is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding SIGNA Sports United and Polished in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polished and SIGNA Sports 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 SIGNA Sports United are associated (or correlated) with Polished. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polished has no effect on the direction of SIGNA Sports i.e., SIGNA Sports and Polished go up and down completely randomly.

Pair Corralation between SIGNA Sports and Polished

Considering the 90-day investment horizon SIGNA Sports United is expected to under-perform the Polished. But the stock apears to be less risky and, when comparing its historical volatility, SIGNA Sports United is 1.23 times less risky than Polished. The stock trades about -0.05 of its potential returns per unit of risk. The Polished is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  57.00  in Polished on September 27, 2024 and sell it today you would lose (3.00) from holding Polished or give up 5.26% of portfolio value over 90 days.

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

SIGNA Sports United  vs.  Polished

SIGNA Sports United

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIGNA Sports United has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SIGNA Sports is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Polished

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Polished has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Polished is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with SIGNA Sports and Polished

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

The idea behind SIGNA Sports United and Polished 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 Global Correlations module to find global opportunities by holding instruments from different markets.