Correlation Between Northann Corp and Aterian

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

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

Diversification Opportunities for Northann Corp and Aterian

-0.54

Correlation Coefficient

Northann Corp  Aterian

Excellent diversification

The 3 months correlation between Northann and Aterian is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Northann Corp and Aterian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aterian and Northann Corp 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 Northann Corp are associated (or correlated) with Aterian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aterian has no effect on the direction of Northann Corp i.e., Northann Corp and Aterian go up and down completely randomly.

Pair Corralation between Northann Corp and Aterian

Considering the 90-day investment horizon Northann Corp is expected to generate 2.06 times more return on investment than Aterian. However, Northann Corp is 2.06 times more volatile than Aterian. It trades about 0.0 of its potential returns per unit of risk. Aterian is currently generating about -0.03 per unit of risk. If you would invest  460.00  in Northann Corp on September 12, 2024 and sell it today you would lose (436.00) from holding Northann Corp or give up 94.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	81.82%
Values	Daily Returns

Northann Corp  vs.  Aterian

Northann Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Northann Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, Northann Corp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Aterian

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Northann Corp and Aterian

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

The idea behind Northann Corp and Aterian 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.