Correlation Between Smoore International and ASICS

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

By analyzing existing cross correlation between Smoore International Holdings and ASICS, you can compare the effects of market volatilities on Smoore International and ASICS 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 Smoore International with a short position of ASICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smoore International and ASICS.

Diversification Opportunities for Smoore International and ASICS

0.4

Correlation Coefficient

Smoore International  ASICS

Very weak diversification

The 3 months correlation between Smoore and ASICS is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Smoore International Holdings and ASICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASICS and Smoore 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 Smoore International Holdings are associated (or correlated) with ASICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASICS has no effect on the direction of Smoore International i.e., Smoore International and ASICS go up and down completely randomly.

Pair Corralation between Smoore International and ASICS

Assuming the 90 days horizon Smoore International Holdings is expected to under-perform the ASICS. In addition to that, Smoore International is 1.68 times more volatile than ASICS. It trades about -0.04 of its total potential returns per unit of risk. ASICS is currently generating about 0.11 per unit of volatility. If you would invest  2,340  in ASICS on January 21, 2024 and sell it today you would earn a total of  2,260  from holding ASICS or generate 96.58% return on investment over 90 days.

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

Smoore International Holdings  vs.  ASICS

Smoore International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Smoore International Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Smoore International reported solid returns over the last few months and may actually be approaching a breakup point.

ASICS

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ASICS are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal fundamental indicators, ASICS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Smoore International and ASICS

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

The idea behind Smoore International Holdings and ASICS 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.