Correlation Between Arhaus and Aftermaster

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

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

Diversification Opportunities for Arhaus and Aftermaster

0.0

Correlation Coefficient

Arhaus  Aftermaster

Pay attention - limited upside

The 3 months correlation between Arhaus and Aftermaster is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Arhaus Inc and Aftermaster in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aftermaster and Arhaus 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 Arhaus Inc are associated (or correlated) with Aftermaster. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aftermaster has no effect on the direction of Arhaus i.e., Arhaus and Aftermaster go up and down completely randomly.

Pair Corralation between Arhaus and Aftermaster

Given the investment horizon of 90 days Arhaus Inc is expected to generate 0.27 times more return on investment than Aftermaster. However, Arhaus Inc is 3.72 times less risky than Aftermaster. It trades about -0.02 of its potential returns per unit of risk. Aftermaster is currently generating about -0.13 per unit of risk. If you would invest  1,125  in Arhaus Inc on September 4, 2024 and sell it today you would lose (86.00) from holding Arhaus Inc or give up 7.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Arhaus Inc  vs.  Aftermaster

Arhaus Inc

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Arhaus Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, Arhaus is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Aftermaster

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aftermaster has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Arhaus and Aftermaster

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

The idea behind Arhaus Inc and Aftermaster 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.