Correlation Between Arbor Technology and Brighten Optix
Can any of the company-specific risk be diversified away by investing in both Arbor Technology and Brighten Optix 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 Arbor Technology and Brighten Optix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arbor Technology and Brighten Optix, you can compare the effects of market volatilities on Arbor Technology and Brighten Optix 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 Arbor Technology with a short position of Brighten Optix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbor Technology and Brighten Optix.
Diversification Opportunities for Arbor Technology and Brighten Optix
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Arbor and Brighten is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Technology and Brighten Optix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brighten Optix and Arbor Technology 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 Arbor Technology are associated (or correlated) with Brighten Optix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brighten Optix has no effect on the direction of Arbor Technology i.e., Arbor Technology and Brighten Optix go up and down completely randomly.
Pair Corralation between Arbor Technology and Brighten Optix
Assuming the 90 days trading horizon Arbor Technology is expected to generate 1.82 times more return on investment than Brighten Optix. However, Arbor Technology is 1.82 times more volatile than Brighten Optix. It trades about 0.24 of its potential returns per unit of risk. Brighten Optix is currently generating about -0.03 per unit of risk. If you would invest 4,185 in Arbor Technology on September 12, 2024 and sell it today you would earn a total of 610.00 from holding Arbor Technology or generate 14.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arbor Technology vs. Brighten Optix
Performance |
| Timeline |
| Arbor Technology |
| Brighten Optix |
Arbor Technology and Brighten Optix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arbor Technology and Brighten Optix
The main advantage of trading using opposite Arbor Technology and Brighten Optix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arbor Technology position performs unexpectedly, Brighten Optix 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 Brighten Optix will offset losses from the drop in Brighten Optix's long position.| Arbor Technology vs. Asustek Computer | Arbor Technology vs. Micro Star International Co | Arbor Technology vs. Compal Electronics | Arbor Technology vs. Wistron Corp |
| Brighten Optix vs. Universal Vision Biotechnology | Brighten Optix vs. Excelsior Medical Co | Brighten Optix vs. Pacific Hospital Supply | Brighten Optix vs. Ruentex Development Co |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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