Correlation Between ARN Media and Alternative Investment
Can any of the company-specific risk be diversified away by investing in both ARN Media and Alternative Investment 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 ARN Media and Alternative Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARN Media Limited and Alternative Investment Trust, you can compare the effects of market volatilities on ARN Media and Alternative Investment 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 ARN Media with a short position of Alternative Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARN Media and Alternative Investment.
Diversification Opportunities for ARN Media and Alternative Investment
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ARN and Alternative is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding ARN Media Limited and Alternative Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternative Investment and ARN Media 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 ARN Media Limited are associated (or correlated) with Alternative Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternative Investment has no effect on the direction of ARN Media i.e., ARN Media and Alternative Investment go up and down completely randomly.
Pair Corralation between ARN Media and Alternative Investment
Assuming the 90 days trading horizon ARN Media Limited is expected to generate 4.04 times more return on investment than Alternative Investment. However, ARN Media is 4.04 times more volatile than Alternative Investment Trust. It trades about 0.06 of its potential returns per unit of risk. Alternative Investment Trust is currently generating about 0.21 per unit of risk. If you would invest 72.00 in ARN Media Limited on August 25, 2024 and sell it today you would earn a total of 2.00 from holding ARN Media Limited or generate 2.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARN Media Limited vs. Alternative Investment Trust
Performance |
| Timeline |
| ARN Media Limited |
| Alternative Investment |
ARN Media and Alternative Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARN Media and Alternative Investment
The main advantage of trading using opposite ARN Media and Alternative Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARN Media position performs unexpectedly, Alternative Investment 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 Alternative Investment will offset losses from the drop in Alternative Investment's long position.| ARN Media vs. Aneka Tambang Tbk | ARN Media vs. Australia and New | ARN Media vs. ANZ Group Holdings | ARN Media vs. Commonwealth Bank |
| Alternative Investment vs. WiseTech Global Limited | Alternative Investment vs. Energy Technologies Limited | Alternative Investment vs. Mach7 Technologies | Alternative Investment vs. Australian Unity Office |
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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