Correlation Between ATRenew and Sea

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

Diversification Opportunities for ATRenew and Sea

0.59

Correlation Coefficient

ATRenew  Sea

Very weak diversification

The 3 months correlation between ATRenew and Sea is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding ATRenew Inc DRC and Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea 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 Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea has no effect on the direction of ATRenew i.e., ATRenew and Sea go up and down completely randomly.

Pair Corralation between ATRenew and Sea

Given the investment horizon of 90 days ATRenew Inc DRC is expected to generate 1.77 times more return on investment than Sea. However, ATRenew is 1.77 times more volatile than Sea. It trades about 0.3 of its potential returns per unit of risk. Sea is currently generating about 0.29 per unit of risk. If you would invest  240.00  in ATRenew Inc DRC on September 2, 2024 and sell it today you would earn a total of  89.00  from holding ATRenew Inc DRC or generate 37.08% 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.  Sea

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.

Sea

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sea are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Sea exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ATRenew and Sea

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

The idea behind ATRenew Inc DRC and Sea 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.