Correlation Between European Wax and SUPER HI

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

By analyzing existing cross correlation between European Wax Center and SUPER HI INTERNATIONAL, you can compare the effects of market volatilities on European Wax and SUPER HI 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 European Wax with a short position of SUPER HI. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Wax and SUPER HI.

Diversification Opportunities for European Wax and SUPER HI

-0.37

Correlation Coefficient

European Wax  SUPER HI

Very good diversification

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

Pair Corralation between European Wax and SUPER HI

Given the investment horizon of 90 days European Wax Center is expected to under-perform the SUPER HI. In addition to that, European Wax is 1.14 times more volatile than SUPER HI INTERNATIONAL. It trades about -0.07 of its total potential returns per unit of risk. SUPER HI INTERNATIONAL is currently generating about -0.01 per unit of volatility. If you would invest  2,939  in SUPER HI INTERNATIONAL on December 20, 2024 and sell it today you would lose (189.00) from holding SUPER HI INTERNATIONAL or give up 6.43% of portfolio value over 90 days.

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

European Wax Center  vs.  SUPER HI INTERNATIONAL

European Wax Center

Risk-Adjusted Performance

Very Weak

Over the last 90 days European Wax Center has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

SUPER HI INTERNATIONAL

Risk-Adjusted Performance

Very Weak

Over the last 90 days SUPER HI INTERNATIONAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, SUPER HI is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with European Wax and SUPER HI

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

The idea behind European Wax Center and SUPER HI 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.