Correlation Between ANTA Sports and Pearson PLC

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Can any of the company-specific risk be diversified away by investing in both ANTA Sports and Pearson PLC 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 ANTA Sports and Pearson PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ANTA Sports Products and Pearson PLC ADR, you can compare the effects of market volatilities on ANTA Sports and Pearson PLC 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 ANTA Sports with a short position of Pearson PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANTA Sports and Pearson PLC.

Diversification Opportunities for ANTA Sports and Pearson PLC

-0.3
  Correlation Coefficient

Very good diversification

The 3 months correlation between ANTA and Pearson is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding ANTA Sports Products and Pearson PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pearson PLC ADR and ANTA 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 ANTA Sports Products are associated (or correlated) with Pearson PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pearson PLC ADR has no effect on the direction of ANTA Sports i.e., ANTA Sports and Pearson PLC go up and down completely randomly.

Pair Corralation between ANTA Sports and Pearson PLC

Assuming the 90 days horizon ANTA Sports is expected to generate 2.0 times less return on investment than Pearson PLC. In addition to that, ANTA Sports is 2.64 times more volatile than Pearson PLC ADR. It trades about 0.02 of its total potential returns per unit of risk. Pearson PLC ADR is currently generating about 0.13 per unit of volatility. If you would invest  1,011  in Pearson PLC ADR on September 12, 2024 and sell it today you would earn a total of  561.00  from holding Pearson PLC ADR or generate 55.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.7%
ValuesDaily Returns

ANTA Sports Products  vs.  Pearson PLC ADR

 Performance 
       Timeline  
ANTA Sports Products 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in ANTA Sports Products are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, ANTA Sports showed solid returns over the last few months and may actually be approaching a breakup point.
Pearson PLC ADR 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Pearson PLC ADR are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Pearson PLC displayed solid returns over the last few months and may actually be approaching a breakup point.

ANTA Sports and Pearson PLC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ANTA Sports and Pearson PLC

The main advantage of trading using opposite ANTA Sports and Pearson PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ANTA Sports position performs unexpectedly, Pearson PLC 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 Pearson PLC will offset losses from the drop in Pearson PLC's long position.
The idea behind ANTA Sports Products and Pearson PLC ADR 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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