Correlation Between Arhaus and Cloudweb

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

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

Diversification Opportunities for Arhaus and Cloudweb

-0.13

Correlation Coefficient

Arhaus  Cloudweb

Good diversification

The 3 months correlation between Arhaus and Cloudweb is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Arhaus Inc and Cloudweb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cloudweb 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 Cloudweb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cloudweb has no effect on the direction of Arhaus i.e., Arhaus and Cloudweb go up and down completely randomly.

Pair Corralation between Arhaus and Cloudweb

Given the investment horizon of 90 days Arhaus is expected to generate 9.45 times less return on investment than Cloudweb. But when comparing it to its historical volatility, Arhaus Inc is 3.41 times less risky than Cloudweb. It trades about 0.03 of its potential returns per unit of risk. Cloudweb is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4.25  in Cloudweb on December 28, 2024 and sell it today you would lose (0.05) from holding Cloudweb or give up 1.18% of portfolio value over 90 days.

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

Arhaus Inc  vs.  Cloudweb

Arhaus Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arhaus Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical indicators, Arhaus may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Cloudweb

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cloudweb are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Cloudweb showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arhaus and Cloudweb

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

The idea behind Arhaus Inc and Cloudweb 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.