Correlation Between USWE Sports and Fenix Outdoor

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

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

Diversification Opportunities for USWE Sports and Fenix Outdoor

-0.62

Correlation Coefficient

USWE Sports  Fenix Outdoor

Excellent diversification

The 3 months correlation between USWE and Fenix is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding USWE Sports AB and Fenix Outdoor International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fenix Outdoor Intern and USWE 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 USWE Sports AB are associated (or correlated) with Fenix Outdoor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fenix Outdoor Intern has no effect on the direction of USWE Sports i.e., USWE Sports and Fenix Outdoor go up and down completely randomly.

Pair Corralation between USWE Sports and Fenix Outdoor

Assuming the 90 days trading horizon USWE Sports AB is expected to under-perform the Fenix Outdoor. In addition to that, USWE Sports is 2.19 times more volatile than Fenix Outdoor International. It trades about -0.02 of its total potential returns per unit of risk. Fenix Outdoor International is currently generating about -0.02 per unit of volatility. If you would invest  81,871  in Fenix Outdoor International on September 1, 2024 and sell it today you would lose (17,671) from holding Fenix Outdoor International or give up 21.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

USWE Sports AB  vs.  Fenix Outdoor International

USWE Sports AB

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in USWE Sports AB are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, USWE Sports unveiled solid returns over the last few months and may actually be approaching a breakup point.

Fenix Outdoor Intern

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with USWE Sports and Fenix Outdoor

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

The idea behind USWE Sports AB and Fenix Outdoor International 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.