Correlation Between Arhaus and Raytech Holding

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

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

Diversification Opportunities for Arhaus and Raytech Holding

0.71

Correlation Coefficient

Arhaus  Raytech Holding

Poor diversification

The 3 months correlation between Arhaus and Raytech is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Arhaus Inc and Raytech Holding Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytech Holding and Arhaus 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 Arhaus Inc are associated (or correlated) with Raytech Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raytech Holding has no effect on the direction of Arhaus i.e., Arhaus and Raytech Holding go up and down completely randomly.

Pair Corralation between Arhaus and Raytech Holding

Given the investment horizon of 90 days Arhaus Inc is expected to under-perform the Raytech Holding. But the stock apears to be less risky and, when comparing its historical volatility, Arhaus Inc is 1.61 times less risky than Raytech Holding. The stock trades about -0.06 of its potential returns per unit of risk. The Raytech Holding Limited is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  167.00  in Raytech Holding Limited on September 2, 2024 and sell it today you would lose (26.00) from holding Raytech Holding Limited or give up 15.57% of portfolio value over 90 days.

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

Arhaus Inc  vs.  Raytech Holding Limited

Arhaus Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arhaus Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Raytech Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Raytech Holding Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Arhaus and Raytech Holding

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

The idea behind Arhaus Inc and Raytech Holding Limited 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.