Correlation Between Soho House and Atour Lifestyle

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

By analyzing existing cross correlation between Soho House Co and Atour Lifestyle Holdings, you can compare the effects of market volatilities on Soho House and Atour Lifestyle 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 Soho House with a short position of Atour Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Soho House and Atour Lifestyle.

Diversification Opportunities for Soho House and Atour Lifestyle

-0.04

Correlation Coefficient

Soho House  Atour Lifestyle

Good diversification

The 3 months correlation between Soho and Atour is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Soho House Co and Atour Lifestyle Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atour Lifestyle Holdings and Soho House 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 Soho House Co are associated (or correlated) with Atour Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atour Lifestyle Holdings has no effect on the direction of Soho House i.e., Soho House and Atour Lifestyle go up and down completely randomly.

Pair Corralation between Soho House and Atour Lifestyle

Given the investment horizon of 90 days Soho House Co is expected to under-perform the Atour Lifestyle. But the stock apears to be less risky and, when comparing its historical volatility, Soho House Co is 1.17 times less risky than Atour Lifestyle. The stock trades about -0.02 of its potential returns per unit of risk. The Atour Lifestyle Holdings is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,974  in Atour Lifestyle Holdings on September 16, 2024 and sell it today you would earn a total of  727.00  from holding Atour Lifestyle Holdings or generate 36.83% return on investment over 90 days.

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

Soho House Co  vs.  Atour Lifestyle Holdings

Soho House

Risk-Adjusted Performance

0 of 100

Very Weak

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

Atour Lifestyle Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Atour Lifestyle Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Atour Lifestyle unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Soho House and Atour Lifestyle

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

The idea behind Soho House Co and Atour Lifestyle Holdings 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.