Correlation Between Old Market and ATRenew

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Can any of the company-specific risk be diversified away by investing in both Old Market 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 Old Market and ATRenew into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Market Capital and ATRenew Inc DRC, you can compare the effects of market volatilities on Old Market 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 Old Market with a short position of ATRenew. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Market and ATRenew.

Diversification Opportunities for Old Market and ATRenew

0.31
  Correlation Coefficient

Weak diversification

The 3 months correlation between Old and ATRenew is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Old Market Capital 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 Old Market 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 Old Market Capital 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 Old Market i.e., Old Market and ATRenew go up and down completely randomly.

Pair Corralation between Old Market and ATRenew

Given the investment horizon of 90 days Old Market is expected to generate 1.85 times less return on investment than ATRenew. But when comparing it to its historical volatility, Old Market Capital is 1.72 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 August 29, 2024 and sell it today you would earn a total of  96.00  from holding ATRenew Inc DRC or generate 44.44% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Old Market Capital  vs.  ATRenew Inc DRC

 Performance 
       Timeline  
Old Market Capital 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Old Market Capital are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Old Market is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
ATRenew Inc DRC 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in ATRenew Inc DRC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, ATRenew exhibited solid returns over the last few months and may actually be approaching a breakup point.

Old Market and ATRenew Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Old Market and ATRenew

The main advantage of trading using opposite Old Market and ATRenew positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Market 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 Old Market Capital 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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