Correlation Between Gap, and ATRenew

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

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

Diversification Opportunities for Gap, and ATRenew

-0.67

Correlation Coefficient

Gap,  ATRenew

Excellent diversification

The 3 months correlation between Gap, and ATRenew is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding The Gap, and ATRenew Inc DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATRenew Inc DRC and Gap, 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 The Gap, are associated (or correlated) with ATRenew. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATRenew Inc DRC has no effect on the direction of Gap, i.e., Gap, and ATRenew go up and down completely randomly.

Pair Corralation between Gap, and ATRenew

Considering the 90-day investment horizon The Gap, is expected to under-perform the ATRenew. But the stock apears to be less risky and, when comparing its historical volatility, The Gap, is 1.18 times less risky than ATRenew. The stock trades about -0.03 of its potential returns per unit of risk. The ATRenew Inc DRC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  289.00  in ATRenew Inc DRC on December 28, 2024 and sell it today you would earn a total of  26.00  from holding ATRenew Inc DRC or generate 9.0% return on investment over 90 days.

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

The Gap,  vs.  ATRenew Inc DRC

Gap,

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Gap, has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest abnormal performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

ATRenew Inc DRC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ATRenew Inc DRC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, ATRenew exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gap, and ATRenew

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

The idea behind The Gap, and ATRenew Inc DRC 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.