Correlation Between Chewy and Estrella Immunopharma

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

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

Diversification Opportunities for Chewy and Estrella Immunopharma

-0.04

Correlation Coefficient

Chewy  Estrella Immunopharma

Good diversification

The 3 months correlation between Chewy and Estrella is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Chewy Inc and Estrella Immunopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Estrella Immunopharma and Chewy 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 Chewy Inc are associated (or correlated) with Estrella Immunopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Estrella Immunopharma has no effect on the direction of Chewy i.e., Chewy and Estrella Immunopharma go up and down completely randomly.

Pair Corralation between Chewy and Estrella Immunopharma

Given the investment horizon of 90 days Chewy is expected to generate 16.12 times less return on investment than Estrella Immunopharma. But when comparing it to its historical volatility, Chewy Inc is 14.0 times less risky than Estrella Immunopharma. It trades about 0.13 of its potential returns per unit of risk. Estrella Immunopharma is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  9.00  in Estrella Immunopharma on September 4, 2024 and sell it today you would earn a total of  0.10  from holding Estrella Immunopharma or generate 1.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	31.25%
Values	Daily Returns

Chewy Inc  vs.  Estrella Immunopharma

Chewy Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chewy Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Chewy showed solid returns over the last few months and may actually be approaching a breakup point.

Estrella Immunopharma

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Estrella Immunopharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, Estrella Immunopharma showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chewy and Estrella Immunopharma

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

The idea behind Chewy Inc and Estrella Immunopharma 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.