Correlation Between Asics Corp and Adidas AG
Can any of the company-specific risk be diversified away by investing in both Asics Corp and Adidas AG 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 Asics Corp and Adidas AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asics Corp ADR and Adidas AG, you can compare the effects of market volatilities on Asics Corp and Adidas AG 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 Asics Corp with a short position of Adidas AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asics Corp and Adidas AG.
Diversification Opportunities for Asics Corp and Adidas AG
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Asics and Adidas is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Asics Corp ADR and Adidas AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adidas AG and Asics Corp 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 Asics Corp ADR are associated (or correlated) with Adidas AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adidas AG has no effect on the direction of Asics Corp i.e., Asics Corp and Adidas AG go up and down completely randomly.
Pair Corralation between Asics Corp and Adidas AG
Assuming the 90 days horizon Asics Corp ADR is expected to generate 0.74 times more return on investment than Adidas AG. However, Asics Corp ADR is 1.35 times less risky than Adidas AG. It trades about 0.27 of its potential returns per unit of risk. Adidas AG is currently generating about -0.02 per unit of risk. If you would invest 1,730 in Asics Corp ADR on August 27, 2024 and sell it today you would earn a total of 223.00 from holding Asics Corp ADR or generate 12.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asics Corp ADR vs. Adidas AG
Performance |
| Timeline |
| Asics Corp ADR |
| Adidas AG |
Asics Corp and Adidas AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asics Corp and Adidas AG
The main advantage of trading using opposite Asics Corp and Adidas AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asics Corp position performs unexpectedly, Adidas AG 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 Adidas AG will offset losses from the drop in Adidas AG's long position.| Asics Corp vs. American Rebel Holdings | Asics Corp vs. American Rebel Holdings | Asics Corp vs. Crocs Inc | Asics Corp vs. On Holding |
| Adidas AG vs. American Rebel Holdings | Adidas AG vs. American Rebel Holdings | Adidas AG vs. Crocs Inc | Adidas AG vs. On Holding |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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