Correlation Between Secoo Holding and Solo Brands

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

By analyzing existing cross correlation between Secoo Holding and Solo Brands, you can compare the effects of market volatilities on Secoo Holding and Solo Brands 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 Secoo Holding with a short position of Solo Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Secoo Holding and Solo Brands.

Diversification Opportunities for Secoo Holding and Solo Brands

0.3

Correlation Coefficient

Secoo Holding  Solo Brands

Weak diversification

The 3 months correlation between Secoo and Solo is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Secoo Holding and Solo Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solo Brands and Secoo Holding 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 Secoo Holding are associated (or correlated) with Solo Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solo Brands has no effect on the direction of Secoo Holding i.e., Secoo Holding and Solo Brands go up and down completely randomly.

Pair Corralation between Secoo Holding and Solo Brands

If you would invest  83.00  in Secoo Holding on August 31, 2024 and sell it today you would earn a total of  0.00  from holding Secoo Holding or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Secoo Holding  vs.  Solo Brands

Secoo Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Secoo Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Secoo Holding is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Solo Brands

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Secoo Holding and Solo Brands

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

The idea behind Secoo Holding and Solo Brands 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.