Correlation Between Aterian and ChargePoint Holdings

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

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

Diversification Opportunities for Aterian and ChargePoint Holdings

0.56

Correlation Coefficient

Aterian  ChargePoint Holdings

Very weak diversification

The 3 months correlation between Aterian and ChargePoint is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Aterian and ChargePoint Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChargePoint Holdings and Aterian 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 Aterian are associated (or correlated) with ChargePoint Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChargePoint Holdings has no effect on the direction of Aterian i.e., Aterian and ChargePoint Holdings go up and down completely randomly.

Pair Corralation between Aterian and ChargePoint Holdings

Given the investment horizon of 90 days Aterian is expected to under-perform the ChargePoint Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Aterian is 2.13 times less risky than ChargePoint Holdings. The stock trades about -0.29 of its potential returns per unit of risk. The ChargePoint Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  125.00  in ChargePoint Holdings on September 24, 2024 and sell it today you would lose (1.00) from holding ChargePoint Holdings or give up 0.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Aterian  vs.  ChargePoint Holdings

Aterian

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aterian has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

ChargePoint Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ChargePoint Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Aterian and ChargePoint Holdings

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

The idea behind Aterian and ChargePoint Holdings 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.