Supply chain networks and return predictability

I use network theory to construct a set of long-short strategies for 65 companies, connected to the tire industry via trade relationships. I find that companies that are more central to the supply chain network earn higher returns that peripheral firms (Information Ratio of 0.72). A plausible explanation to this is that central firms are exposed to more shocks and, therefore, command a higher risk premium. Empirical evidence for this sector also suggests marginal return predictability for supply chain networks (for the revenues and market data), however, it does not outperform the benchmarks due to fast information diffusion across the network