Correlation Between On Holding and Good Vibrations

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

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

Diversification Opportunities for On Holding and Good Vibrations

0.54

Correlation Coefficient

On Holding  Good Vibrations

Very weak diversification

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

Pair Corralation between On Holding and Good Vibrations

Given the investment horizon of 90 days On Holding is expected to under-perform the Good Vibrations. But the stock apears to be less risky and, when comparing its historical volatility, On Holding is 3.42 times less risky than Good Vibrations. The stock trades about -0.1 of its potential returns per unit of risk. The Good Vibrations Shoes is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  0.43  in Good Vibrations Shoes on December 17, 2024 and sell it today you would lose (0.07) from holding Good Vibrations Shoes or give up 16.28% of portfolio value over 90 days.

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

On Holding  vs.  Good Vibrations Shoes

On Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days On Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Good Vibrations Shoes

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Good Vibrations Shoes are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, Good Vibrations may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with On Holding and Good Vibrations

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

The idea behind On Holding and Good Vibrations Shoes 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.