Correlation Between Arhaus and YY Group

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

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

Diversification Opportunities for Arhaus and YY Group

0.38

Correlation Coefficient

Arhaus  YY Group

Weak diversification

The 3 months correlation between Arhaus and YYGH is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Arhaus Inc and YY Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YY Group Holding 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 YY Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YY Group Holding has no effect on the direction of Arhaus i.e., Arhaus and YY Group go up and down completely randomly.

Pair Corralation between Arhaus and YY Group

Given the investment horizon of 90 days Arhaus Inc is expected to under-perform the YY Group. But the stock apears to be less risky and, when comparing its historical volatility, Arhaus Inc is 1.39 times less risky than YY Group. The stock trades about -0.03 of its potential returns per unit of risk. The YY Group Holding is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  117.00  in YY Group Holding on October 10, 2024 and sell it today you would earn a total of  43.00  from holding YY Group Holding or generate 36.75% return on investment over 90 days.

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

Arhaus Inc  vs.  YY Group Holding

Arhaus Inc

Risk-Adjusted Performance

0 of 100

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.

YY Group Holding

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in YY Group Holding are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain technical and fundamental indicators, YY Group demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arhaus and YY Group

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

The idea behind Arhaus Inc and YY Group Holding 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.