Correlation Between Hour Loop and Yoshitsu

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

By analyzing existing cross correlation between Hour Loop and Yoshitsu Co Ltd, you can compare the effects of market volatilities on Hour Loop and Yoshitsu 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 Hour Loop with a short position of Yoshitsu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hour Loop and Yoshitsu.

Diversification Opportunities for Hour Loop and Yoshitsu

-0.68

Correlation Coefficient

Hour Loop  Yoshitsu

Excellent diversification

The 3 months correlation between Hour and Yoshitsu is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Hour Loop and Yoshitsu Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yoshitsu and Hour Loop 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 Hour Loop are associated (or correlated) with Yoshitsu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yoshitsu has no effect on the direction of Hour Loop i.e., Hour Loop and Yoshitsu go up and down completely randomly.

Pair Corralation between Hour Loop and Yoshitsu

Given the investment horizon of 90 days Hour Loop is expected to generate 0.67 times more return on investment than Yoshitsu. However, Hour Loop is 1.49 times less risky than Yoshitsu. It trades about 0.04 of its potential returns per unit of risk. Yoshitsu Co Ltd is currently generating about -0.08 per unit of risk. If you would invest  134.00  in Hour Loop on September 3, 2024 and sell it today you would earn a total of  9.00  from holding Hour Loop or generate 6.72% return on investment over 90 days.

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

Hour Loop  vs.  Yoshitsu Co Ltd

Hour Loop

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hour Loop are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Hour Loop reported solid returns over the last few months and may actually be approaching a breakup point.

Yoshitsu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yoshitsu Co Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators 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 Hour Loop and Yoshitsu

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

The idea behind Hour Loop and Yoshitsu Co Ltd 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.