Correlation Between NETGEAR and ATRenew

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

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

Diversification Opportunities for NETGEAR and ATRenew

-0.28

Correlation Coefficient

NETGEAR  ATRenew

Very good diversification

The 3 months correlation between NETGEAR and ATRenew is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR 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 NETGEAR 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 NETGEAR 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 NETGEAR i.e., NETGEAR and ATRenew go up and down completely randomly.

Pair Corralation between NETGEAR and ATRenew

Given the investment horizon of 90 days NETGEAR is expected to under-perform the ATRenew. But the stock apears to be less risky and, when comparing its historical volatility, NETGEAR is 1.36 times less risky than ATRenew. The stock trades about -0.24 of its potential returns per unit of risk. The ATRenew Inc DRC is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  170.00  in ATRenew Inc DRC on February 9, 2024 and sell it today you would earn a total of  115.00  from holding ATRenew Inc DRC or generate 67.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

NETGEAR  vs.  ATRenew Inc DRC

NETGEAR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NETGEAR has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, NETGEAR is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

ATRenew Inc DRC

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ATRenew Inc DRC are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, ATRenew exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NETGEAR and ATRenew

The main advantage of trading using opposite NETGEAR and ATRenew positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NETGEAR 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 NETGEAR 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.