Correlation Between 1StdibsCom and Groupon

Can any of the company-specific risk be diversified away by investing in both 1StdibsCom and Groupon 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 1StdibsCom and Groupon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 1StdibsCom and Groupon, you can compare the effects of market volatilities on 1StdibsCom and Groupon 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 1StdibsCom with a short position of Groupon. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1StdibsCom and Groupon.

Diversification Opportunities for 1StdibsCom and Groupon

0.56

Correlation Coefficient

1StdibsCom  Groupon

Very weak diversification

The 3 months correlation between 1StdibsCom and Groupon is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding 1StdibsCom and Groupon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupon and 1StdibsCom 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 1StdibsCom are associated (or correlated) with Groupon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupon has no effect on the direction of 1StdibsCom i.e., 1StdibsCom and Groupon go up and down completely randomly.

Pair Corralation between 1StdibsCom and Groupon

Given the investment horizon of 90 days 1StdibsCom is expected to under-perform the Groupon. But the stock apears to be less risky and, when comparing its historical volatility, 1StdibsCom is 1.3 times less risky than Groupon. The stock trades about 0.0 of its potential returns per unit of risk. The Groupon is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,604  in Groupon on May 11, 2025 and sell it today you would earn a total of  1,085  from holding Groupon or generate 41.67% return on investment over 90 days.

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

1StdibsCom  vs.  Groupon

1StdibsCom

Risk-Adjusted Performance

Weakest

Over the last 90 days 1StdibsCom has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, 1StdibsCom is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Groupon

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Groupon are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Groupon displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 1StdibsCom and Groupon

The main advantage of trading using opposite 1StdibsCom and Groupon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1StdibsCom position performs unexpectedly, Groupon 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 Groupon will offset losses from the drop in Groupon's long position.

The idea behind 1StdibsCom and Groupon 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.

Check out your portfolio center.

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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.