Correlation Between Academy Sports and Addex Therapeutics

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Can any of the company-specific risk be diversified away by investing in both Academy Sports and Addex Therapeutics 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 Addex Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Academy Sports OutdoorsInc and Addex Therapeutics, you can compare the effects of market volatilities on Academy Sports and Addex Therapeutics 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 Addex Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Academy Sports and Addex Therapeutics.

Diversification Opportunities for Academy Sports and Addex Therapeutics

-0.45
  Correlation Coefficient

Very good diversification

The 3 months correlation between Academy and Addex is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports OutdoorsInc and Addex Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addex Therapeutics 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 OutdoorsInc are associated (or correlated) with Addex Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addex Therapeutics has no effect on the direction of Academy Sports i.e., Academy Sports and Addex Therapeutics go up and down completely randomly.

Pair Corralation between Academy Sports and Addex Therapeutics

Considering the 90-day investment horizon Academy Sports OutdoorsInc is expected to under-perform the Addex Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Academy Sports OutdoorsInc is 3.13 times less risky than Addex Therapeutics. The stock trades about -0.33 of its potential returns per unit of risk. The Addex Therapeutics is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest  1,198  in Addex Therapeutics on January 17, 2024 and sell it today you would earn a total of  1,277  from holding Addex Therapeutics or generate 106.59% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.24%
ValuesDaily Returns

Academy Sports OutdoorsInc  vs.  Addex Therapeutics

 Performance 
       Timeline  
Academy Sports Outdo 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Academy Sports OutdoorsInc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Academy Sports is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
Addex Therapeutics 

Risk-Adjusted Performance

23 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Addex Therapeutics are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Addex Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

Academy Sports and Addex Therapeutics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Academy Sports and Addex Therapeutics

The main advantage of trading using opposite Academy Sports and Addex Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Academy Sports position performs unexpectedly, Addex Therapeutics 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 Addex Therapeutics will offset losses from the drop in Addex Therapeutics' long position.
The idea behind Academy Sports OutdoorsInc and Addex Therapeutics 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.
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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