Correlation Between ARN Media and Autosports
Can any of the company-specific risk be diversified away by investing in both ARN Media and Autosports 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 Autosports 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 Autosports Group, you can compare the effects of market volatilities on ARN Media and Autosports 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 Autosports. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARN Media and Autosports.
Diversification Opportunities for ARN Media and Autosports
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ARN and Autosports is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding ARN Media Limited and Autosports Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autosports Group 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 Autosports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autosports Group has no effect on the direction of ARN Media i.e., ARN Media and Autosports go up and down completely randomly.
Pair Corralation between ARN Media and Autosports
Assuming the 90 days trading horizon ARN Media Limited is expected to generate 2.19 times more return on investment than Autosports. However, ARN Media is 2.19 times more volatile than Autosports Group. It trades about 0.0 of its potential returns per unit of risk. Autosports Group is currently generating about -0.67 per unit of risk. If you would invest 72.00 in ARN Media Limited on August 29, 2024 and sell it today you would lose (1.00) from holding ARN Media Limited or give up 1.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARN Media Limited vs. Autosports Group
Performance |
| Timeline |
| ARN Media Limited |
| Autosports Group |
ARN Media and Autosports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARN Media and Autosports
The main advantage of trading using opposite ARN Media and Autosports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARN Media position performs unexpectedly, Autosports 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 Autosports will offset losses from the drop in Autosports' long position.| ARN Media vs. G8 Education | ARN Media vs. Embark Education Group | ARN Media vs. Aurelia Metals | ARN Media vs. Perseus Mining |
| Autosports vs. Summit Resources Limited | Autosports vs. Champion Iron | Autosports vs. Ridley | Autosports vs. Peel Mining |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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