Correlation Between Sally Beauty and Oriental Culture
Can any of the company-specific risk be diversified away by investing in both Sally Beauty and Oriental Culture 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 Sally Beauty and Oriental Culture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sally Beauty Holdings and Oriental Culture Holding, you can compare the effects of market volatilities on Sally Beauty and Oriental Culture 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 Sally Beauty with a short position of Oriental Culture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sally Beauty and Oriental Culture.
Diversification Opportunities for Sally Beauty and Oriental Culture
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sally and Oriental is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Sally Beauty Holdings and Oriental Culture Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Culture Holding and Sally Beauty 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 Sally Beauty Holdings are associated (or correlated) with Oriental Culture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Culture Holding has no effect on the direction of Sally Beauty i.e., Sally Beauty and Oriental Culture go up and down completely randomly.
Pair Corralation between Sally Beauty and Oriental Culture
Considering the 90-day investment horizon Sally Beauty is expected to generate 1.56 times less return on investment than Oriental Culture. But when comparing it to its historical volatility, Sally Beauty Holdings is 2.27 times less risky than Oriental Culture. It trades about 0.04 of its potential returns per unit of risk. Oriental Culture Holding is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 136.00 in Oriental Culture Holding on August 27, 2024 and sell it today you would lose (8.00) from holding Oriental Culture Holding or give up 5.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sally Beauty Holdings vs. Oriental Culture Holding
Performance |
| Timeline |
| Sally Beauty Holdings |
| Oriental Culture Holding |
Sally Beauty and Oriental Culture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sally Beauty and Oriental Culture
The main advantage of trading using opposite Sally Beauty and Oriental Culture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sally Beauty position performs unexpectedly, Oriental Culture 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 Oriental Culture will offset losses from the drop in Oriental Culture's long position.| Sally Beauty vs. Oriental Culture Holding | Sally Beauty vs. Hour Loop | Sally Beauty vs. Qurate Retail Series | Sally Beauty vs. Emerge Commerce |
| Oriental Culture vs. Hour Loop | Oriental Culture vs. Jowell Global | Oriental Culture vs. Qurate Retail Series | Oriental Culture vs. Emerge Commerce |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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