Correlation Between Hour Loop and Delivery Hero

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

By analyzing existing cross correlation between Hour Loop and Delivery Hero SE, you can compare the effects of market volatilities on Hour Loop and Delivery Hero 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 Hour Loop with a short position of Delivery Hero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hour Loop and Delivery Hero.

Diversification Opportunities for Hour Loop and Delivery Hero

0.03

Correlation Coefficient

Hour Loop  Delivery Hero

Significant diversification

The 3 months correlation between Hour and Delivery is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Hour Loop and Delivery Hero SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delivery Hero SE and Hour Loop 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 Hour Loop are associated (or correlated) with Delivery Hero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delivery Hero SE has no effect on the direction of Hour Loop i.e., Hour Loop and Delivery Hero go up and down completely randomly.

Pair Corralation between Hour Loop and Delivery Hero

Given the investment horizon of 90 days Hour Loop is expected to generate 0.92 times more return on investment than Delivery Hero. However, Hour Loop is 1.09 times less risky than Delivery Hero. It trades about -0.02 of its potential returns per unit of risk. Delivery Hero SE is currently generating about -0.16 per unit of risk. If you would invest  166.00  in Hour Loop on September 16, 2024 and sell it today you would lose (5.00) from holding Hour Loop or give up 3.01% of portfolio value over 90 days.

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

Hour Loop  vs.  Delivery Hero SE

Hour Loop

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hour Loop are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Hour Loop reported solid returns over the last few months and may actually be approaching a breakup point.

Delivery Hero SE

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Delivery Hero SE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical indicators, Delivery Hero may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hour Loop and Delivery Hero

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

The idea behind Hour Loop and Delivery Hero SE 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.