Correlation Between NIKE and ANTA Sports

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

By analyzing existing cross correlation between NIKE Inc and ANTA Sports Products, you can compare the effects of market volatilities on NIKE and ANTA Sports 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 NIKE with a short position of ANTA Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIKE and ANTA Sports.

Diversification Opportunities for NIKE and ANTA Sports

-0.58

Correlation Coefficient

NIKE  ANTA Sports

Excellent diversification

The 3 months correlation between NIKE and ANTA is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding NIKE Inc and ANTA Sports Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANTA Sports Products and NIKE 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 NIKE Inc are associated (or correlated) with ANTA Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANTA Sports Products has no effect on the direction of NIKE i.e., NIKE and ANTA Sports go up and down completely randomly.

Pair Corralation between NIKE and ANTA Sports

Assuming the 90 days trading horizon NIKE Inc is expected to under-perform the ANTA Sports. But the stock apears to be less risky and, when comparing its historical volatility, NIKE Inc is 1.82 times less risky than ANTA Sports. The stock trades about -0.04 of its potential returns per unit of risk. The ANTA Sports Products is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  811.00  in ANTA Sports Products on March 16, 2024 and sell it today you would earn a total of  189.00  from holding ANTA Sports Products or generate 23.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

NIKE Inc  vs.  ANTA Sports Products

NIKE Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

ANTA Sports Products

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ANTA Sports Products are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ANTA Sports reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NIKE and ANTA Sports

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

The idea behind NIKE Inc and ANTA Sports Products 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.