Correlation Between 111 and Leslies

Can any of the company-specific risk be diversified away by investing in both 111 and Leslies 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 Leslies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 111 Inc and Leslies, you can compare the effects of market volatilities on 111 and Leslies 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 Leslies. Check out your portfolio center. Please also check ongoing floating volatility patterns of 111 and Leslies.

Diversification Opportunities for 111 and Leslies

-0.36

Correlation Coefficient

111  Leslies

Very good diversification

The 3 months correlation between 111 and Leslies is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding 111 Inc and Leslies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leslies 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 Leslies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leslies has no effect on the direction of 111 i.e., 111 and Leslies go up and down completely randomly.

Pair Corralation between 111 and Leslies

Allowing for the 90-day total investment horizon 111 Inc is expected to generate 1.43 times more return on investment than Leslies. However, 111 is 1.43 times more volatile than Leslies. It trades about 0.11 of its potential returns per unit of risk. Leslies is currently generating about -0.01 per unit of risk. If you would invest  56.00  in 111 Inc on September 16, 2024 and sell it today you would earn a total of  27.00  from holding 111 Inc or generate 48.21% return on investment over 90 days.

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

111 Inc  vs.  Leslies

111 Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 111 Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, 111 demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Leslies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leslies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Leslies is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with 111 and Leslies

The main advantage of trading using opposite 111 and Leslies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 111 position performs unexpectedly, Leslies 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 Leslies will offset losses from the drop in Leslies' long position.

The idea behind 111 Inc and Leslies 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.