Correlation Between 665859AT1 and ATRenew

Can any of the company-specific risk be diversified away by investing in both 665859AT1 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 665859AT1 and ATRenew into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NORTHERN TR P and ATRenew Inc DRC, you can compare the effects of market volatilities on 665859AT1 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 665859AT1 with a short position of ATRenew. Check out your portfolio center. Please also check ongoing floating volatility patterns of 665859AT1 and ATRenew.

Diversification Opportunities for 665859AT1 and ATRenew

-0.03

Correlation Coefficient

665859AT1  ATRenew

Good diversification

The 3 months correlation between 665859AT1 and ATRenew is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding NORTHERN TR P 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 665859AT1 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 NORTHERN TR P 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 665859AT1 i.e., 665859AT1 and ATRenew go up and down completely randomly.

Pair Corralation between 665859AT1 and ATRenew

Assuming the 90 days trading horizon 665859AT1 is expected to generate 14.41 times less return on investment than ATRenew. But when comparing it to its historical volatility, NORTHERN TR P is 12.95 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 0.04 of returns per unit of risk over similar time horizon. If you would invest  216.00  in ATRenew Inc DRC on October 5, 2024 and sell it today you would earn a total of  59.00  from holding ATRenew Inc DRC or generate 27.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

NORTHERN TR P  vs.  ATRenew Inc DRC

NORTHERN TR P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NORTHERN TR P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 665859AT1 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

0 of 100

Weak

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

Pair Trading with 665859AT1 and ATRenew

The main advantage of trading using opposite 665859AT1 and ATRenew positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 665859AT1 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 NORTHERN TR P 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.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.