Correlation Between Hello and Trivago NV

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

By analyzing existing cross correlation between Hello Group and Trivago NV, you can compare the effects of market volatilities on Hello and Trivago NV 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 Hello with a short position of Trivago NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hello and Trivago NV.

Diversification Opportunities for Hello and Trivago NV

-0.4

Correlation Coefficient

Hello  Trivago NV

Very good diversification

The 3 months correlation between Hello and Trivago is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Hello Group and Trivago NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trivago NV and Hello 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 Hello Group are associated (or correlated) with Trivago NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trivago NV has no effect on the direction of Hello i.e., Hello and Trivago NV go up and down completely randomly.

Pair Corralation between Hello and Trivago NV

Given the investment horizon of 90 days Hello Group is expected to under-perform the Trivago NV. But the stock apears to be less risky and, when comparing its historical volatility, Hello Group is 1.99 times less risky than Trivago NV. The stock trades about -0.13 of its potential returns per unit of risk. The Trivago NV is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest  168.00  in Trivago NV on September 4, 2024 and sell it today you would earn a total of  85.00  from holding Trivago NV or generate 50.6% return on investment over 90 days.

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

Hello Group  vs.  Trivago NV

Hello Group

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hello Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Hello may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Trivago NV

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Trivago NV are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Trivago NV may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hello and Trivago NV

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

The idea behind Hello Group and Trivago NV 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.

Check out your portfolio center.

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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.