Correlation Between Ioneer and ATRenew

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

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

Diversification Opportunities for Ioneer and ATRenew

-0.52

Correlation Coefficient

Ioneer  ATRenew

Excellent diversification

The 3 months correlation between Ioneer and ATRenew is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding ioneer Ltd American 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 Ioneer 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 ioneer Ltd American 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 Ioneer i.e., Ioneer and ATRenew go up and down completely randomly.

Pair Corralation between Ioneer and ATRenew

Given the investment horizon of 90 days Ioneer is expected to generate 2.14 times less return on investment than ATRenew. But when comparing it to its historical volatility, ioneer Ltd American is 1.02 times less risky than ATRenew. It trades about 0.05 of its potential returns per unit of risk. ATRenew Inc DRC is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  110.00  in ATRenew Inc DRC on October 7, 2024 and sell it today you would earn a total of  165.00  from holding ATRenew Inc DRC or generate 150.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.56%
Values	Daily Returns

ioneer Ltd American  vs.  ATRenew Inc DRC

ioneer American

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ioneer Ltd American has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

ATRenew Inc DRC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Ioneer and ATRenew

The main advantage of trading using opposite Ioneer and ATRenew positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ioneer 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 ioneer Ltd American 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.