Correlation Between Delivery Hero and Redbubble

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

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

Diversification Opportunities for Delivery Hero and Redbubble

0.07

Correlation Coefficient

Delivery Hero  Redbubble

Significant diversification

The 3 months correlation between Delivery and Redbubble is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Delivery Hero SE and Redbubble Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redbubble Limited and Delivery Hero 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 Delivery Hero SE are associated (or correlated) with Redbubble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redbubble Limited has no effect on the direction of Delivery Hero i.e., Delivery Hero and Redbubble go up and down completely randomly.

Pair Corralation between Delivery Hero and Redbubble

Assuming the 90 days horizon Delivery Hero SE is expected to under-perform the Redbubble. But the pink sheet apears to be less risky and, when comparing its historical volatility, Delivery Hero SE is 1.84 times less risky than Redbubble. The pink sheet trades about -0.19 of its potential returns per unit of risk. The Redbubble Limited is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  23.00  in Redbubble Limited on September 13, 2024 and sell it today you would lose (3.00) from holding Redbubble Limited or give up 13.04% of portfolio value over 90 days.

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

Delivery Hero SE  vs.  Redbubble Limited

Delivery Hero SE

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Delivery Hero SE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical indicators, Delivery Hero may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Redbubble Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Redbubble Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Delivery Hero and Redbubble

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

The idea behind Delivery Hero SE and Redbubble Limited 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.