Correlation Between Liquidity Services and Delivery Hero

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

By analyzing existing cross correlation between Liquidity Services and Delivery Hero SE, you can compare the effects of market volatilities on Liquidity Services and Delivery Hero 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 Liquidity Services with a short position of Delivery Hero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liquidity Services and Delivery Hero.

Diversification Opportunities for Liquidity Services and Delivery Hero

0.22

Correlation Coefficient

Liquidity Services  Delivery Hero

Modest diversification

The 3 months correlation between Liquidity and Delivery is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Liquidity Services and Delivery Hero SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delivery Hero SE and Liquidity Services 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 Liquidity Services are associated (or correlated) with Delivery Hero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delivery Hero SE has no effect on the direction of Liquidity Services i.e., Liquidity Services and Delivery Hero go up and down completely randomly.

Pair Corralation between Liquidity Services and Delivery Hero

Given the investment horizon of 90 days Liquidity Services is expected to generate 0.64 times more return on investment than Delivery Hero. However, Liquidity Services is 1.56 times less risky than Delivery Hero. It trades about -0.01 of its potential returns per unit of risk. Delivery Hero SE is currently generating about -0.03 per unit of risk. If you would invest  3,247  in Liquidity Services on December 30, 2024 and sell it today you would lose (108.00) from holding Liquidity Services or give up 3.33% of portfolio value over 90 days.

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

Liquidity Services  vs.  Delivery Hero SE

Liquidity Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Liquidity Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Liquidity Services is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Delivery Hero SE

Risk-Adjusted Performance

Very Weak

Over the last 90 days Delivery Hero SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Liquidity Services and Delivery Hero

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

The idea behind Liquidity Services and Delivery Hero SE 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.