Correlation Between Actron Technology and Arima Communications
Can any of the company-specific risk be diversified away by investing in both Actron Technology and Arima Communications 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 Actron Technology and Arima Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Actron Technology and Arima Communications Corp, you can compare the effects of market volatilities on Actron Technology and Arima Communications 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 Actron Technology with a short position of Arima Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Actron Technology and Arima Communications.
Diversification Opportunities for Actron Technology and Arima Communications
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Actron and Arima is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Actron Technology and Arima Communications Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arima Communications Corp and Actron 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 Actron Technology are associated (or correlated) with Arima Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arima Communications Corp has no effect on the direction of Actron Technology i.e., Actron Technology and Arima Communications go up and down completely randomly.
Pair Corralation between Actron Technology and Arima Communications
Assuming the 90 days trading horizon Actron Technology is expected to under-perform the Arima Communications. But the stock apears to be less risky and, when comparing its historical volatility, Actron Technology is 7.12 times less risky than Arima Communications. The stock trades about -0.14 of its potential returns per unit of risk. The Arima Communications Corp is currently generating about 0.64 of returns per unit of risk over similar time horizon. If you would invest 950.00 in Arima Communications Corp on September 13, 2024 and sell it today you would earn a total of 1,490 from holding Arima Communications Corp or generate 156.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Actron Technology vs. Arima Communications Corp
Performance |
| Timeline |
| Actron Technology |
| Arima Communications Corp |
Actron Technology and Arima Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Actron Technology and Arima Communications
The main advantage of trading using opposite Actron Technology and Arima Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Actron Technology position performs unexpectedly, Arima Communications 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 Arima Communications will offset losses from the drop in Arima Communications' long position.| Actron Technology vs. E Lead Electronic Co | Actron Technology vs. Jentech Precision Industrial | Actron Technology vs. Turvo International Co | Actron Technology vs. Ruentex Development Co |
| Arima Communications vs. AU Optronics | Arima Communications vs. Innolux Corp | Arima Communications vs. Ruentex Development Co | Arima Communications vs. WiseChip Semiconductor |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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