Correlation Between Boston Beer and ATRenew

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

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

Diversification Opportunities for Boston Beer and ATRenew

0.28

Correlation Coefficient

Boston Beer  ATRenew

Modest diversification

The 3 months correlation between Boston and ATRenew is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and ATRenew Inc DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATRenew Inc DRC and Boston Beer 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 Boston Beer are associated (or correlated) with ATRenew. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATRenew Inc DRC has no effect on the direction of Boston Beer i.e., Boston Beer and ATRenew go up and down completely randomly.

Pair Corralation between Boston Beer and ATRenew

Considering the 90-day investment horizon Boston Beer is expected to under-perform the ATRenew. But the stock apears to be less risky and, when comparing its historical volatility, Boston Beer is 1.48 times less risky than ATRenew. The stock trades about -0.54 of its potential returns per unit of risk. The ATRenew Inc DRC is currently generating about -0.2 of returns per unit of risk over similar time horizon. If you would invest  297.00  in ATRenew Inc DRC on October 13, 2024 and sell it today you would lose (35.00) from holding ATRenew Inc DRC or give up 11.78% of portfolio value over 90 days.

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

Boston Beer  vs.  ATRenew Inc DRC

Boston Beer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boston Beer has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

ATRenew Inc DRC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATRenew Inc DRC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, ATRenew is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Boston Beer and ATRenew

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

The idea behind Boston Beer and ATRenew Inc DRC 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.