Correlation Between Academy Sports and China Coal
Can any of the company-specific risk be diversified away by investing in both Academy Sports and China Coal 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 Academy Sports and China Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Academy Sports Outdoors and China Coal Energy, you can compare the effects of market volatilities on Academy Sports and China Coal 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 Academy Sports with a short position of China Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Academy Sports and China Coal.
Diversification Opportunities for Academy Sports and China Coal
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Academy and China is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and China Coal Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Coal Energy and Academy 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 Academy Sports Outdoors are associated (or correlated) with China Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Coal Energy has no effect on the direction of Academy Sports i.e., Academy Sports and China Coal go up and down completely randomly.
Pair Corralation between Academy Sports and China Coal
Considering the 90-day investment horizon Academy Sports is expected to generate 35.58 times less return on investment than China Coal. But when comparing it to its historical volatility, Academy Sports Outdoors is 2.22 times less risky than China Coal. It trades about 0.0 of its potential returns per unit of risk. China Coal Energy is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,678 in China Coal Energy on September 3, 2024 and sell it today you would earn a total of 682.00 from holding China Coal Energy or generate 40.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Academy Sports Outdoors vs. China Coal Energy
Performance |
| Timeline |
| Academy Sports Outdoors |
| China Coal Energy |
Academy Sports and China Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Academy Sports and China Coal
The main advantage of trading using opposite Academy Sports and China Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Academy Sports position performs unexpectedly, China Coal 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 China Coal will offset losses from the drop in China Coal's long position.| Academy Sports vs. Williams Sonoma | Academy Sports vs. AutoZone | Academy Sports vs. Ulta Beauty | Academy Sports vs. Best Buy Co |
| China Coal vs. NiSource | China Coal vs. Treasury Wine Estates | China Coal vs. Pure Cycle | China Coal vs. Empresa Distribuidora y |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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