Correlation Between ATRenew and Advance Auto

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

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

Diversification Opportunities for ATRenew and Advance Auto

-0.61

Correlation Coefficient

ATRenew  Advance Auto

Excellent diversification

The 3 months correlation between ATRenew and Advance is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding ATRenew Inc DRC and Advance Auto Parts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advance Auto Parts and ATRenew 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 ATRenew Inc DRC are associated (or correlated) with Advance Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advance Auto Parts has no effect on the direction of ATRenew i.e., ATRenew and Advance Auto go up and down completely randomly.

Pair Corralation between ATRenew and Advance Auto

Given the investment horizon of 90 days ATRenew Inc DRC is expected to generate 1.22 times more return on investment than Advance Auto. However, ATRenew is 1.22 times more volatile than Advance Auto Parts. It trades about 0.02 of its potential returns per unit of risk. Advance Auto Parts is currently generating about -0.06 per unit of risk. If you would invest  289.00  in ATRenew Inc DRC on December 29, 2024 and sell it today you would earn a total of  2.00  from holding ATRenew Inc DRC or generate 0.69% return on investment over 90 days.

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

ATRenew Inc DRC  vs.  Advance Auto Parts

ATRenew Inc DRC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ATRenew Inc DRC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, ATRenew may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Advance Auto Parts

Risk-Adjusted Performance

Very Weak

Over the last 90 days Advance Auto Parts has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with ATRenew and Advance Auto

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

The idea behind ATRenew Inc DRC and Advance Auto Parts 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.