Correlation Between Arima Communications and STARLUX Airlines
Can any of the company-specific risk be diversified away by investing in both Arima Communications and STARLUX Airlines 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 Arima Communications and STARLUX Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arima Communications Corp and STARLUX Airlines Co, you can compare the effects of market volatilities on Arima Communications and STARLUX Airlines 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 Arima Communications with a short position of STARLUX Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arima Communications and STARLUX Airlines.
Diversification Opportunities for Arima Communications and STARLUX Airlines
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Arima and STARLUX is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Arima Communications Corp and STARLUX Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STARLUX Airlines and Arima Communications 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 Arima Communications Corp are associated (or correlated) with STARLUX Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STARLUX Airlines has no effect on the direction of Arima Communications i.e., Arima Communications and STARLUX Airlines go up and down completely randomly.
Pair Corralation between Arima Communications and STARLUX Airlines
Assuming the 90 days trading horizon Arima Communications Corp is expected to under-perform the STARLUX Airlines. In addition to that, Arima Communications is 5.74 times more volatile than STARLUX Airlines Co. It trades about -0.07 of its total potential returns per unit of risk. STARLUX Airlines Co is currently generating about 0.15 per unit of volatility. If you would invest 2,780 in STARLUX Airlines Co on October 22, 2024 and sell it today you would earn a total of 10.00 from holding STARLUX Airlines Co or generate 0.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 19.05% |
| Values | Daily Returns |
Arima Communications Corp vs. STARLUX Airlines Co
Performance |
| Timeline |
| Arima Communications Corp |
| STARLUX Airlines |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Arima Communications and STARLUX Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arima Communications and STARLUX Airlines
The main advantage of trading using opposite Arima Communications and STARLUX Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arima Communications position performs unexpectedly, STARLUX Airlines 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 STARLUX Airlines will offset losses from the drop in STARLUX Airlines' long position.| Arima Communications vs. Silitech Technology Corp | Arima Communications vs. Merry Electronics Co | Arima Communications vs. Cheng Uei Precision | Arima Communications vs. Wistron NeWeb Corp |
| STARLUX Airlines vs. Syntek Semiconductor Co | STARLUX Airlines vs. Delpha Construction Co | STARLUX Airlines vs. Healthconn Corp | STARLUX Airlines vs. Orient Semiconductor Electronics |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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