Correlation Between ThredUp and Hexagon AB

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

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

Diversification Opportunities for ThredUp and Hexagon AB

-0.5

Correlation Coefficient

ThredUp  Hexagon AB

Very good diversification

The 3 months correlation between ThredUp and Hexagon is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding ThredUp and Hexagon AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexagon AB and ThredUp 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 ThredUp are associated (or correlated) with Hexagon AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexagon AB has no effect on the direction of ThredUp i.e., ThredUp and Hexagon AB go up and down completely randomly.

Pair Corralation between ThredUp and Hexagon AB

Given the investment horizon of 90 days ThredUp is expected to generate 3.41 times more return on investment than Hexagon AB. However, ThredUp is 3.41 times more volatile than Hexagon AB. It trades about 0.15 of its potential returns per unit of risk. Hexagon AB is currently generating about -0.02 per unit of risk. If you would invest  76.00  in ThredUp on October 9, 2024 and sell it today you would earn a total of  72.00  from holding ThredUp or generate 94.74% return on investment over 90 days.

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

ThredUp  vs.  Hexagon AB

ThredUp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ThredUp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, ThredUp reported solid returns over the last few months and may actually be approaching a breakup point.

Hexagon AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hexagon AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Hexagon AB is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ThredUp and Hexagon AB

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

The idea behind ThredUp and Hexagon AB 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.