Correlation Between 111 and RH

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Can any of the company-specific risk be diversified away by investing in both 111 and RH 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 111 and RH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 111 Inc and RH, you can compare the effects of market volatilities on 111 and RH 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 111 with a short position of RH. Check out your portfolio center. Please also check ongoing floating volatility patterns of 111 and RH.

Diversification Opportunities for 111 and RH

-0.13
  Correlation Coefficient
 111
 RH

Good diversification

The 3 months correlation between 111 and RH is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding 111 Inc and RH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RH and 111 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 111 Inc are associated (or correlated) with RH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RH has no effect on the direction of 111 i.e., 111 and RH go up and down completely randomly.

Pair Corralation between 111 and RH

Allowing for the 90-day total investment horizon 111 Inc is expected to under-perform the RH. In addition to that, 111 is 1.82 times more volatile than RH. It trades about -0.2 of its total potential returns per unit of risk. RH is currently generating about 0.18 per unit of volatility. If you would invest  26,572  in RH on December 29, 2023 and sell it today you would earn a total of  3,127  from holding RH or generate 11.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

111 Inc  vs.  RH

 Performance 
       Timeline  
111 Inc 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days 111 Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite sluggish performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.
RH 

Risk-Adjusted Performance

7 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in RH are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical indicators, RH demonstrated solid returns over the last few months and may actually be approaching a breakup point.

111 and RH Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with 111 and RH

The main advantage of trading using opposite 111 and RH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 111 position performs unexpectedly, RH 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 RH will offset losses from the drop in RH's long position.
The idea behind 111 Inc and RH 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 Commodity Directory module to find actively traded commodities issued by global exchanges.

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