Correlation Between ATRenew and NET Power

Can any of the company-specific risk be diversified away by investing in both ATRenew and NET Power 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 NET Power 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 NET Power, you can compare the effects of market volatilities on ATRenew and NET Power 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 NET Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATRenew and NET Power.

Diversification Opportunities for ATRenew and NET Power

0.4

Correlation Coefficient

ATRenew  NET Power

Very weak diversification

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

Pair Corralation between ATRenew and NET Power

Given the investment horizon of 90 days ATRenew Inc DRC is expected to generate 1.63 times more return on investment than NET Power. However, ATRenew is 1.63 times more volatile than NET Power. It trades about 0.19 of its potential returns per unit of risk. NET Power is currently generating about -0.33 per unit of risk. If you would invest  246.00  in ATRenew Inc DRC on September 20, 2024 and sell it today you would earn a total of  56.00  from holding ATRenew Inc DRC or generate 22.76% return on investment over 90 days.

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

ATRenew Inc DRC  vs.  NET Power

ATRenew Inc DRC

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ATRenew Inc DRC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, ATRenew exhibited solid returns over the last few months and may actually be approaching a breakup point.

NET Power

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NET Power are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, NET Power reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ATRenew and NET Power

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

The idea behind ATRenew Inc DRC and NET Power 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.