Correlation Between Sharp Corp and Arhaus

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

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

Diversification Opportunities for Sharp Corp and Arhaus

-0.14

Correlation Coefficient

Sharp Corp  Arhaus

Good diversification

The 3 months correlation between Sharp and Arhaus is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Sharp Corp ADR and Arhaus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arhaus Inc and Sharp Corp 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 Sharp Corp ADR are associated (or correlated) with Arhaus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arhaus Inc has no effect on the direction of Sharp Corp i.e., Sharp Corp and Arhaus go up and down completely randomly.

Pair Corralation between Sharp Corp and Arhaus

Assuming the 90 days horizon Sharp Corp ADR is expected to generate 1.02 times more return on investment than Arhaus. However, Sharp Corp is 1.02 times more volatile than Arhaus Inc. It trades about 0.05 of its potential returns per unit of risk. Arhaus Inc is currently generating about -0.02 per unit of risk. If you would invest  128.00  in Sharp Corp ADR on December 2, 2024 and sell it today you would earn a total of  38.00  from holding Sharp Corp ADR or generate 29.69% return on investment over 90 days.

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

Sharp Corp ADR  vs.  Arhaus Inc

Sharp Corp ADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sharp Corp ADR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Sharp Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Arhaus Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arhaus Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, Arhaus is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sharp Corp and Arhaus

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

The idea behind Sharp Corp ADR and Arhaus Inc 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.