Correlation Between Samsonite International and Adidas AG
Can any of the company-specific risk be diversified away by investing in both Samsonite International 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 Samsonite International and Adidas AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsonite International SA and Adidas AG ADR, you can compare the effects of market volatilities on Samsonite International 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 Samsonite International with a short position of Adidas AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsonite International and Adidas AG.
Diversification Opportunities for Samsonite International and Adidas AG
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Samsonite and Adidas is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Samsonite International SA and Adidas AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adidas AG ADR and Samsonite International 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 Samsonite International SA 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 ADR has no effect on the direction of Samsonite International i.e., Samsonite International and Adidas AG go up and down completely randomly.
Pair Corralation between Samsonite International and Adidas AG
Assuming the 90 days horizon Samsonite International is expected to generate 1.47 times less return on investment than Adidas AG. But when comparing it to its historical volatility, Samsonite International SA is 1.22 times less risky than Adidas AG. It trades about 0.18 of its potential returns per unit of risk. Adidas AG ADR is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 12,405 in Adidas AG ADR on November 18, 2024 and sell it today you would earn a total of 1,149 from holding Adidas AG ADR or generate 9.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsonite International SA vs. Adidas AG ADR
Performance |
| Timeline |
| Samsonite International |
| Adidas AG ADR |
Samsonite International and Adidas AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsonite International and Adidas AG
The main advantage of trading using opposite Samsonite International and Adidas AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsonite International 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.| Samsonite International vs. Puma SE | Samsonite International vs. Asics Corp ADR | Samsonite International vs. Adidas AG ADR | Samsonite International vs. Wolverine World Wide |
| Adidas AG vs. ASICS | Adidas AG vs. Asics Corp ADR | Adidas AG vs. American Rebel Holdings | Adidas AG vs. American Rebel Holdings |
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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