Correlation Between Qurate Retail and Secoo Holding

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

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

Diversification Opportunities for Qurate Retail and Secoo Holding

0.17

Correlation Coefficient

Qurate Retail  Secoo Holding

Average diversification

The 3 months correlation between Qurate and Secoo is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Qurate Retail and Secoo Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Secoo Holding and Qurate Retail 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 Qurate Retail are associated (or correlated) with Secoo Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Secoo Holding has no effect on the direction of Qurate Retail i.e., Qurate Retail and Secoo Holding go up and down completely randomly.

Pair Corralation between Qurate Retail and Secoo Holding

Assuming the 90 days horizon Qurate Retail is expected to generate 0.09 times more return on investment than Secoo Holding. However, Qurate Retail is 10.74 times less risky than Secoo Holding. It trades about -0.01 of its potential returns per unit of risk. Secoo Holding is currently generating about -0.26 per unit of risk. If you would invest  4,963  in Qurate Retail on February 11, 2024 and sell it today you would lose (63.00) from holding Qurate Retail or give up 1.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	79.07%
Values	Daily Returns

Qurate Retail  vs.  Secoo Holding

Qurate Retail

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Qurate Retail are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Qurate Retail reported solid returns over the last few months and may actually be approaching a breakup point.

Secoo Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Secoo Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Qurate Retail and Secoo Holding

The main advantage of trading using opposite Qurate Retail and Secoo Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qurate Retail position performs unexpectedly, Secoo Holding 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 Secoo Holding will offset losses from the drop in Secoo Holding's long position.

The idea behind Qurate Retail and Secoo Holding 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.