Correlation Between Waste Management and ATRenew

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

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

Diversification Opportunities for Waste Management and ATRenew

0.24

Correlation Coefficient

Waste Management  ATRenew

Modest diversification

The 3 months correlation between Waste and ATRenew is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management 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 Waste Management 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 Waste Management 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 Waste Management i.e., Waste Management and ATRenew go up and down completely randomly.

Pair Corralation between Waste Management and ATRenew

Allowing for the 90-day total investment horizon Waste Management is expected to generate 6.44 times less return on investment than ATRenew. But when comparing it to its historical volatility, Waste Management is 4.0 times less risky than ATRenew. It trades about 0.01 of its potential returns per unit of risk. ATRenew Inc DRC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  262.00  in ATRenew Inc DRC on October 22, 2024 and sell it today you would earn a total of  2.00  from holding ATRenew Inc DRC or generate 0.76% return on investment over 90 days.

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

Waste Management  vs.  ATRenew Inc DRC

Waste Management

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Waste Management are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Waste Management is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

ATRenew Inc DRC

Risk-Adjusted Performance

1 of 100

Weak

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 Waste Management and ATRenew

The main advantage of trading using opposite Waste Management and ATRenew positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management 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 Waste Management 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.