Correlation Between ARN Media and Clime Investment
Can any of the company-specific risk be diversified away by investing in both ARN Media and Clime 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 Clime 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 Clime Investment Management, you can compare the effects of market volatilities on ARN Media and Clime 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 Clime Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARN Media and Clime Investment.
Diversification Opportunities for ARN Media and Clime Investment
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ARN and Clime is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding ARN Media Limited and Clime Investment Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clime Investment Man 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 Clime Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clime Investment Man has no effect on the direction of ARN Media i.e., ARN Media and Clime Investment go up and down completely randomly.
Pair Corralation between ARN Media and Clime Investment
Assuming the 90 days trading horizon ARN Media is expected to generate 1.09 times less return on investment than Clime Investment. In addition to that, ARN Media is 1.12 times more volatile than Clime Investment Management. It trades about 0.01 of its total potential returns per unit of risk. Clime Investment Management is currently generating about 0.02 per unit of volatility. If you would invest 34.00 in Clime Investment Management on August 25, 2024 and sell it today you would earn a total of 1.00 from holding Clime Investment Management or generate 2.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
ARN Media Limited vs. Clime Investment Management
Performance |
| Timeline |
| ARN Media Limited |
| Clime Investment Man |
ARN Media and Clime Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARN Media and Clime Investment
The main advantage of trading using opposite ARN Media and Clime Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARN Media position performs unexpectedly, Clime 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 Clime Investment will offset losses from the drop in Clime Investment's long position.| ARN Media vs. Gtn | ARN Media vs. Dynamic Drill And | ARN Media vs. Insignia Financial | ARN Media vs. G8 Education |
| Clime Investment vs. Kingsrose Mining | Clime Investment vs. Andean Silver Limited | Clime Investment vs. Capitol Health | Clime Investment vs. Eagle Mountain 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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