Correlation Between Sailfish Royalty and Adidas AG

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

By analyzing existing cross correlation between Sailfish Royalty Corp and Adidas AG, you can compare the effects of market volatilities on Sailfish Royalty 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 Sailfish Royalty with a short position of Adidas AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sailfish Royalty and Adidas AG.

Diversification Opportunities for Sailfish Royalty and Adidas AG

-0.53

Correlation Coefficient

Sailfish Royalty  Adidas AG

Excellent diversification

The 3 months correlation between Sailfish and Adidas is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Sailfish Royalty Corp and Adidas AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adidas AG and Sailfish Royalty 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 Sailfish Royalty Corp 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 has no effect on the direction of Sailfish Royalty i.e., Sailfish Royalty and Adidas AG go up and down completely randomly.

Pair Corralation between Sailfish Royalty and Adidas AG

Assuming the 90 days horizon Sailfish Royalty Corp is expected to generate 1.22 times more return on investment than Adidas AG. However, Sailfish Royalty is 1.22 times more volatile than Adidas AG. It trades about 0.13 of its potential returns per unit of risk. Adidas AG is currently generating about -0.05 per unit of risk. If you would invest  96.00  in Sailfish Royalty Corp on January 14, 2025 and sell it today you would earn a total of  24.00  from holding Sailfish Royalty Corp or generate 25.0% return on investment over 90 days.

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

Sailfish Royalty Corp  vs.  Adidas AG

Sailfish Royalty Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sailfish Royalty Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sailfish Royalty reported solid returns over the last few months and may actually be approaching a breakup point.

Adidas AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Adidas AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Sailfish Royalty and Adidas AG

The main advantage of trading using opposite Sailfish Royalty and Adidas AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sailfish Royalty 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.

The idea behind Sailfish Royalty Corp and Adidas AG 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.