Correlation Between Chinese Gamer and Arbor Technology
Can any of the company-specific risk be diversified away by investing in both Chinese Gamer and Arbor Technology 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 Chinese Gamer and Arbor Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chinese Gamer International and Arbor Technology, you can compare the effects of market volatilities on Chinese Gamer and Arbor Technology 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 Chinese Gamer with a short position of Arbor Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chinese Gamer and Arbor Technology.
Diversification Opportunities for Chinese Gamer and Arbor Technology
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Chinese and Arbor is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Chinese Gamer International and Arbor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbor Technology and Chinese Gamer 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 Chinese Gamer International are associated (or correlated) with Arbor Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbor Technology has no effect on the direction of Chinese Gamer i.e., Chinese Gamer and Arbor Technology go up and down completely randomly.
Pair Corralation between Chinese Gamer and Arbor Technology
Assuming the 90 days trading horizon Chinese Gamer is expected to generate 4.5 times less return on investment than Arbor Technology. But when comparing it to its historical volatility, Chinese Gamer International is 1.33 times less risky than Arbor Technology. It trades about 0.01 of its potential returns per unit of risk. Arbor Technology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 4,275 in Arbor Technology on November 4, 2024 and sell it today you would earn a total of 575.00 from holding Arbor Technology or generate 13.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chinese Gamer International vs. Arbor Technology
Performance |
| Timeline |
| Chinese Gamer Intern |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Arbor Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Chinese Gamer and Arbor Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chinese Gamer and Arbor Technology
The main advantage of trading using opposite Chinese Gamer and Arbor Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chinese Gamer position performs unexpectedly, Arbor Technology 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 Arbor Technology will offset losses from the drop in Arbor Technology's long position.The idea behind Chinese Gamer International and Arbor Technology 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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