Correlation Between H M and RYU Apparel

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

By analyzing existing cross correlation between H M Hennes and RYU Apparel, you can compare the effects of market volatilities on H M and RYU Apparel 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 H M with a short position of RYU Apparel. Check out your portfolio center. Please also check ongoing floating volatility patterns of H M and RYU Apparel.

Diversification Opportunities for H M and RYU Apparel

0.33

Correlation Coefficient

H M  RYU Apparel

Weak diversification

The 3 months correlation between HMRZF and RYU is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding H M Hennes and RYU Apparel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RYU Apparel and H M 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 H M Hennes are associated (or correlated) with RYU Apparel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RYU Apparel has no effect on the direction of H M i.e., H M and RYU Apparel go up and down completely randomly.

Pair Corralation between H M and RYU Apparel

Assuming the 90 days horizon H M Hennes is expected to generate 0.15 times more return on investment than RYU Apparel. However, H M Hennes is 6.47 times less risky than RYU Apparel. It trades about 0.02 of its potential returns per unit of risk. RYU Apparel is currently generating about -0.01 per unit of risk. If you would invest  1,219  in H M Hennes on October 11, 2024 and sell it today you would earn a total of  100.00  from holding H M Hennes or generate 8.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	16.52%
Values	Daily Returns

H M Hennes  vs.  RYU Apparel

H M Hennes

Risk-Adjusted Performance

0 of 100

Very Weak

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

RYU Apparel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RYU Apparel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, RYU Apparel is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with H M and RYU Apparel

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

The idea behind H M Hennes and RYU Apparel 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.