Correlation Between ATRenew and ALLTEL

Can any of the company-specific risk be diversified away by investing in both ATRenew and ALLTEL 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 ALLTEL 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 ALLTEL P 7875, you can compare the effects of market volatilities on ATRenew and ALLTEL 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 ALLTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATRenew and ALLTEL.

Diversification Opportunities for ATRenew and ALLTEL

-0.22

Correlation Coefficient

ATRenew  ALLTEL

Very good diversification

The 3 months correlation between ATRenew and ALLTEL is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding ATRenew Inc DRC and ALLTEL P 7875 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALLTEL P 7875 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 ALLTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALLTEL P 7875 has no effect on the direction of ATRenew i.e., ATRenew and ALLTEL go up and down completely randomly.

Pair Corralation between ATRenew and ALLTEL

Given the investment horizon of 90 days ATRenew Inc DRC is expected to under-perform the ALLTEL. In addition to that, ATRenew is 1.8 times more volatile than ALLTEL P 7875. It trades about -0.11 of its total potential returns per unit of risk. ALLTEL P 7875 is currently generating about -0.04 per unit of volatility. If you would invest  11,389  in ALLTEL P 7875 on October 22, 2024 and sell it today you would lose (136.00) from holding ALLTEL P 7875 or give up 1.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	72.22%
Values	Daily Returns

ATRenew Inc DRC  vs.  ALLTEL P 7875

ATRenew Inc DRC

Risk-Adjusted Performance

1 of 100

Insignificant

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 February 2025.

ALLTEL P 7875

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALLTEL P 7875 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ALLTEL is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ATRenew and ALLTEL

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

The idea behind ATRenew Inc DRC and ALLTEL P 7875 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.

Check out your portfolio center.

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 Global Correlations module to find global opportunities by holding instruments from different markets.