Correlation Between PetMed Express and Café Serendipity
Can any of the company-specific risk be diversified away by investing in both PetMed Express and Café Serendipity 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 PetMed Express and Café Serendipity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PetMed Express and Caf Serendipity Holdings, you can compare the effects of market volatilities on PetMed Express and Café Serendipity 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 PetMed Express with a short position of Café Serendipity. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetMed Express and Café Serendipity.
Diversification Opportunities for PetMed Express and Café Serendipity
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PetMed and Café is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding PetMed Express and Caf Serendipity Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caf Serendipity Holdings and PetMed Express 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 PetMed Express are associated (or correlated) with Café Serendipity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caf Serendipity Holdings has no effect on the direction of PetMed Express i.e., PetMed Express and Café Serendipity go up and down completely randomly.
Pair Corralation between PetMed Express and Café Serendipity
Given the investment horizon of 90 days PetMed Express is expected to under-perform the Café Serendipity. But the stock apears to be less risky and, when comparing its historical volatility, PetMed Express is 14.29 times less risky than Café Serendipity. The stock trades about -0.06 of its potential returns per unit of risk. The Caf Serendipity Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4.00 in Caf Serendipity Holdings on September 2, 2024 and sell it today you would lose (3.98) from holding Caf Serendipity Holdings or give up 99.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PetMed Express vs. Caf Serendipity Holdings
Performance |
| Timeline |
| PetMed Express |
| Caf Serendipity Holdings |
PetMed Express and Café Serendipity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PetMed Express and Café Serendipity
The main advantage of trading using opposite PetMed Express and Café Serendipity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetMed Express position performs unexpectedly, Café Serendipity 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 Café Serendipity will offset losses from the drop in Café Serendipity's long position.| PetMed Express vs. High Tide | PetMed Express vs. China Jo Jo Drugstores | PetMed Express vs. Walgreens Boots Alliance | PetMed Express vs. 111 Inc |
| Café Serendipity vs. China Jo Jo Drugstores | Café Serendipity vs. SunLink Health Systems | Café Serendipity vs. Leafly Holdings | Café Serendipity vs. PetMed Express |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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