Correlation Between Columbia Sportswear and Chuangs China

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

By analyzing existing cross correlation between Columbia Sportswear and Chuangs China Investments, you can compare the effects of market volatilities on Columbia Sportswear and Chuangs China 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 Columbia Sportswear with a short position of Chuangs China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Sportswear and Chuangs China.

Diversification Opportunities for Columbia Sportswear and Chuangs China

-0.74

Correlation Coefficient

Columbia Sportswear  Chuangs China

Pay attention - limited upside

The 3 months correlation between Columbia and Chuangs is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Sportswear and Chuangs China Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chuangs China Investments and Columbia Sportswear 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 Columbia Sportswear are associated (or correlated) with Chuangs China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chuangs China Investments has no effect on the direction of Columbia Sportswear i.e., Columbia Sportswear and Chuangs China go up and down completely randomly.

Pair Corralation between Columbia Sportswear and Chuangs China

Assuming the 90 days horizon Columbia Sportswear is expected to under-perform the Chuangs China. But the stock apears to be less risky and, when comparing its historical volatility, Columbia Sportswear is 1.61 times less risky than Chuangs China. The stock trades about -0.08 of its potential returns per unit of risk. The Chuangs China Investments is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Chuangs China Investments on April 24, 2025 and sell it today you would earn a total of  0.25  from holding Chuangs China Investments or generate 25.0% return on investment over 90 days.

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

Columbia Sportswear  vs.  Chuangs China Investments

Columbia Sportswear

Risk-Adjusted Performance

Very Weak

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

Chuangs China Investments

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chuangs China Investments are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Chuangs China reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Columbia Sportswear and Chuangs China

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

The idea behind Columbia Sportswear and Chuangs China Investments 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.