Correlation Between A1 and Arhaus

Can any of the company-specific risk be diversified away by investing in both A1 and Arhaus 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 A1 and Arhaus into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between A1 Group and Arhaus Inc, you can compare the effects of market volatilities on A1 and Arhaus 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 A1 with a short position of Arhaus. Check out your portfolio center. Please also check ongoing floating volatility patterns of A1 and Arhaus.

Diversification Opportunities for A1 and Arhaus

-0.37

Correlation Coefficient

A1  Arhaus

Very good diversification

The 3 months correlation between A1 and Arhaus is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding A1 Group and Arhaus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arhaus Inc and A1 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 A1 Group are associated (or correlated) with Arhaus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arhaus Inc has no effect on the direction of A1 i.e., A1 and Arhaus go up and down completely randomly.

Pair Corralation between A1 and Arhaus

Given the investment horizon of 90 days A1 Group is expected to generate 3.31 times more return on investment than Arhaus. However, A1 is 3.31 times more volatile than Arhaus Inc. It trades about 0.11 of its potential returns per unit of risk. Arhaus Inc is currently generating about -0.21 per unit of risk. If you would invest  0.18  in A1 Group on December 2, 2024 and sell it today you would earn a total of  0.02  from holding A1 Group or generate 11.11% return on investment over 90 days.

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

A1 Group  vs.  Arhaus Inc

A1 Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in A1 Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, A1 displayed solid returns over the last few months and may actually be approaching a breakup point.

Arhaus Inc

Risk-Adjusted Performance

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.

Pair Trading with A1 and Arhaus

The main advantage of trading using opposite A1 and Arhaus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A1 position performs unexpectedly, Arhaus 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 Arhaus will offset losses from the drop in Arhaus' long position.

The idea behind A1 Group and Arhaus Inc 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.