Correlation Between Hello and Outbrain

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

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

Diversification Opportunities for Hello and Outbrain

-0.31

Correlation Coefficient

Hello  Outbrain

Very good diversification

The 3 months correlation between Hello and Outbrain is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Hello Group and Outbrain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Outbrain and Hello 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 Hello Group are associated (or correlated) with Outbrain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Outbrain has no effect on the direction of Hello i.e., Hello and Outbrain go up and down completely randomly.

Pair Corralation between Hello and Outbrain

Given the investment horizon of 90 days Hello Group is expected to under-perform the Outbrain. But the stock apears to be less risky and, when comparing its historical volatility, Hello Group is 1.13 times less risky than Outbrain. The stock trades about -0.11 of its potential returns per unit of risk. The Outbrain is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest  427.00  in Outbrain on September 3, 2024 and sell it today you would earn a total of  116.00  from holding Outbrain or generate 27.17% return on investment over 90 days.

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

Hello Group  vs.  Outbrain

Hello Group

Risk-Adjusted Performance

3 of 100

Insignificant

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

Outbrain

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Outbrain are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Outbrain may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hello and Outbrain

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

The idea behind Hello Group and Outbrain 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.