Correlation Between Asset Entities and Groupon

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

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

Diversification Opportunities for Asset Entities and Groupon

0.37

Correlation Coefficient

Asset Entities  Groupon

Weak diversification

The 3 months correlation between Asset and Groupon is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Asset Entities Class and Groupon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupon and Asset Entities 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 Asset Entities Class are associated (or correlated) with Groupon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupon has no effect on the direction of Asset Entities i.e., Asset Entities and Groupon go up and down completely randomly.

Pair Corralation between Asset Entities and Groupon

Given the investment horizon of 90 days Asset Entities Class is expected to under-perform the Groupon. In addition to that, Asset Entities is 1.52 times more volatile than Groupon. It trades about -0.31 of its total potential returns per unit of risk. Groupon is currently generating about -0.19 per unit of volatility. If you would invest  1,291  in Groupon on January 26, 2024 and sell it today you would lose (237.00) from holding Groupon or give up 18.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Asset Entities Class  vs.  Groupon

Asset Entities Class

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Asset Entities Class are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Asset Entities unveiled solid returns over the last few months and may actually be approaching a breakup point.

Groupon

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Asset Entities and Groupon

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

The idea behind Asset Entities Class and Groupon 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.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.