Correlation Between Alchemy Investments and Chewy

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

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

Diversification Opportunities for Alchemy Investments and Chewy

0.39

Correlation Coefficient

Alchemy Investments  Chewy

Weak diversification

The 3 months correlation between Alchemy and Chewy is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Alchemy Investments Acquisitio and Chewy Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chewy Inc and Alchemy Investments 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 Alchemy Investments Acquisition are associated (or correlated) with Chewy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chewy Inc has no effect on the direction of Alchemy Investments i.e., Alchemy Investments and Chewy go up and down completely randomly.

Pair Corralation between Alchemy Investments and Chewy

Given the investment horizon of 90 days Alchemy Investments is expected to generate 1.54 times less return on investment than Chewy. But when comparing it to its historical volatility, Alchemy Investments Acquisition is 5.16 times less risky than Chewy. It trades about 0.03 of its potential returns per unit of risk. Chewy Inc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  4,013  in Chewy Inc on September 28, 2024 and sell it today you would lose (606.00) from holding Chewy Inc or give up 15.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	76.81%
Values	Daily Returns

Alchemy Investments Acquisitio  vs.  Chewy Inc

Alchemy Investments

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alchemy Investments Acquisition are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Alchemy Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Chewy Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chewy Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Chewy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alchemy Investments and Chewy

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

The idea behind Alchemy Investments Acquisition and Chewy Inc 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.