Correlation Between Capstone Technologies and Arhaus

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

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

Diversification Opportunities for Capstone Technologies and Arhaus

-0.36

Correlation Coefficient

Capstone Technologies  Arhaus

Very good diversification

The 3 months correlation between Capstone and Arhaus is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Capstone Technologies Group and Arhaus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arhaus Inc and Capstone Technologies 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 Capstone Technologies 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 Capstone Technologies i.e., Capstone Technologies and Arhaus go up and down completely randomly.

Pair Corralation between Capstone Technologies and Arhaus

Given the investment horizon of 90 days Capstone Technologies Group is expected to under-perform the Arhaus. But the pink sheet apears to be less risky and, when comparing its historical volatility, Capstone Technologies Group is 11.98 times less risky than Arhaus. The pink sheet trades about -0.13 of its potential returns per unit of risk. The Arhaus Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  928.00  in Arhaus Inc on December 29, 2024 and sell it today you would earn a total of  10.00  from holding Arhaus Inc or generate 1.08% return on investment over 90 days.

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

Capstone Technologies Group  vs.  Arhaus Inc

Capstone Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capstone Technologies Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Capstone Technologies is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Arhaus Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arhaus Inc are ranked lower than 1 (%) 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.

Pair Trading with Capstone Technologies and Arhaus

The main advantage of trading using opposite Capstone Technologies and Arhaus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capstone Technologies 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 Capstone Technologies 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.