Correlation Between ATRenew and Compass Diversified
Can any of the company-specific risk be diversified away by investing in both ATRenew and Compass Diversified 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 ATRenew and Compass Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATRenew Inc DRC and Compass Diversified Holdings, you can compare the effects of market volatilities on ATRenew and Compass Diversified 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 ATRenew with a short position of Compass Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATRenew and Compass Diversified.
Diversification Opportunities for ATRenew and Compass Diversified
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ATRenew and Compass is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding ATRenew Inc DRC and Compass Diversified Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass Diversified and ATRenew 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 ATRenew Inc DRC are associated (or correlated) with Compass Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compass Diversified has no effect on the direction of ATRenew i.e., ATRenew and Compass Diversified go up and down completely randomly.
Pair Corralation between ATRenew and Compass Diversified
Given the investment horizon of 90 days ATRenew Inc DRC is expected to generate 5.69 times more return on investment than Compass Diversified. However, ATRenew is 5.69 times more volatile than Compass Diversified Holdings. It trades about 0.1 of its potential returns per unit of risk. Compass Diversified Holdings is currently generating about -0.01 per unit of risk. If you would invest 107.00 in ATRenew Inc DRC on October 29, 2024 and sell it today you would earn a total of 164.00 from holding ATRenew Inc DRC or generate 153.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
ATRenew Inc DRC vs. Compass Diversified Holdings
Performance |
| Timeline |
| ATRenew Inc DRC |
| Compass Diversified |
ATRenew and Compass Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATRenew and Compass Diversified
The main advantage of trading using opposite ATRenew and Compass Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATRenew position performs unexpectedly, Compass Diversified 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 Compass Diversified will offset losses from the drop in Compass Diversified's long position.The idea behind ATRenew Inc DRC and Compass Diversified Holdings 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.| Compass Diversified vs. Wheels Up Experience | Compass Diversified vs. Ryanair Holdings PLC | Compass Diversified vs. Alaska Air Group | Compass Diversified vs. Fair Isaac |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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