Correlation Between Solo Brands and HWH International

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

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

Diversification Opportunities for Solo Brands and HWH International

-0.36

Correlation Coefficient

Solo Brands  HWH International

Very good diversification

The 3 months correlation between Solo and HWH is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Solo Brands and HWH International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HWH International and Solo Brands 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 Solo Brands are associated (or correlated) with HWH International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HWH International has no effect on the direction of Solo Brands i.e., Solo Brands and HWH International go up and down completely randomly.

Pair Corralation between Solo Brands and HWH International

Considering the 90-day investment horizon Solo Brands is expected to under-perform the HWH International. But the stock apears to be less risky and, when comparing its historical volatility, Solo Brands is 3.09 times less risky than HWH International. The stock trades about -0.02 of its potential returns per unit of risk. The HWH International is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  50.00  in HWH International on September 2, 2024 and sell it today you would earn a total of  48.00  from holding HWH International or generate 96.0% return on investment over 90 days.

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

Solo Brands  vs.  HWH International

Solo Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solo Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Solo Brands is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

HWH International

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with Solo Brands and HWH International

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

The idea behind Solo Brands and HWH International 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.