Correlation Between ALLTEL and ATRenew

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

By analyzing existing cross correlation between ALLTEL P 7875 and ATRenew Inc DRC, you can compare the effects of market volatilities on ALLTEL 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 ALLTEL with a short position of ATRenew. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALLTEL and ATRenew.

Diversification Opportunities for ALLTEL and ATRenew

-0.22

Correlation Coefficient

ALLTEL  ATRenew

Very good diversification

The 3 months correlation between ALLTEL and ATRenew is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding ALLTEL P 7875 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 ALLTEL 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 ALLTEL P 7875 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 ALLTEL i.e., ALLTEL and ATRenew go up and down completely randomly.

Pair Corralation between ALLTEL and ATRenew

Assuming the 90 days trading horizon ALLTEL P 7875 is expected to generate 0.56 times more return on investment than ATRenew. However, ALLTEL P 7875 is 1.8 times less risky than ATRenew. It trades about -0.04 of its potential returns per unit of risk. ATRenew Inc DRC is currently generating about -0.11 per unit of risk. If you would invest  11,389  in ALLTEL P 7875 on October 22, 2024 and sell it today you would lose (136.00) from holding ALLTEL P 7875 or give up 1.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	72.22%
Values	Daily Returns

ALLTEL P 7875  vs.  ATRenew Inc DRC

ALLTEL P 7875

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALLTEL P 7875 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ALLTEL is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

ATRenew Inc DRC

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ATRenew Inc DRC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, ATRenew may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with ALLTEL and ATRenew

The main advantage of trading using opposite ALLTEL and ATRenew positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALLTEL 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 ALLTEL P 7875 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.