Correlation Between Adidas AG and Yue Yuen
Can any of the company-specific risk be diversified away by investing in both Adidas AG and Yue Yuen 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 Adidas AG and Yue Yuen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adidas AG ADR and Yue Yuen Industrial, you can compare the effects of market volatilities on Adidas AG and Yue Yuen 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 Adidas AG with a short position of Yue Yuen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adidas AG and Yue Yuen.
Diversification Opportunities for Adidas AG and Yue Yuen
Poor diversification
The 3 months correlation between Adidas and Yue is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Adidas AG ADR and Yue Yuen Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yue Yuen Industrial and Adidas AG 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 Adidas AG ADR are associated (or correlated) with Yue Yuen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yue Yuen Industrial has no effect on the direction of Adidas AG i.e., Adidas AG and Yue Yuen go up and down completely randomly.
Pair Corralation between Adidas AG and Yue Yuen
If you would invest 10,933 in Adidas AG ADR on February 9, 2024 and sell it today you would earn a total of 1,002 from holding Adidas AG ADR or generate 9.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adidas AG ADR vs. Yue Yuen Industrial
Performance |
| Timeline |
| Adidas AG ADR |
| Yue Yuen Industrial |
Adidas AG and Yue Yuen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adidas AG and Yue Yuen
The main advantage of trading using opposite Adidas AG and Yue Yuen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adidas AG position performs unexpectedly, Yue Yuen 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 Yue Yuen will offset losses from the drop in Yue Yuen's long position.| Adidas AG vs. Asics Corp ADR | Adidas AG vs. American Rebel Holdings | Adidas AG vs. American Rebel Holdings | Adidas AG vs. PUMA SE |
| Yue Yuen vs. Asics Corp ADR | Yue Yuen vs. American Rebel Holdings | Yue Yuen vs. American Rebel Holdings | Yue Yuen vs. Adidas AG ADR |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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