Correlation Between ARN Media and Falcon Metals
Can any of the company-specific risk be diversified away by investing in both ARN Media and Falcon Metals 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 Falcon Metals 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 Falcon Metals, you can compare the effects of market volatilities on ARN Media and Falcon Metals 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 Falcon Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARN Media and Falcon Metals.
Diversification Opportunities for ARN Media and Falcon Metals
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ARN and Falcon is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding ARN Media Limited and Falcon Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Metals 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 Falcon Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Metals has no effect on the direction of ARN Media i.e., ARN Media and Falcon Metals go up and down completely randomly.
Pair Corralation between ARN Media and Falcon Metals
Assuming the 90 days trading horizon ARN Media Limited is expected to under-perform the Falcon Metals. But the stock apears to be less risky and, when comparing its historical volatility, ARN Media Limited is 1.61 times less risky than Falcon Metals. The stock trades about -0.09 of its potential returns per unit of risk. The Falcon Metals is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 12.00 in Falcon Metals on October 29, 2024 and sell it today you would earn a total of 2.00 from holding Falcon Metals or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARN Media Limited vs. Falcon Metals
Performance |
| Timeline |
| ARN Media Limited |
| Falcon Metals |
ARN Media and Falcon Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARN Media and Falcon Metals
The main advantage of trading using opposite ARN Media and Falcon Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARN Media position performs unexpectedly, Falcon Metals 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 Falcon Metals will offset losses from the drop in Falcon Metals' long position.| ARN Media vs. Hammer Metals | ARN Media vs. Lykos Metals | ARN Media vs. Torque Metals | ARN Media vs. Dalaroo Metals |
| Falcon Metals vs. MetalsGrove Mining | Falcon Metals vs. Saferoads Holdings | Falcon Metals vs. Perseus Mining | Falcon Metals vs. Sun Silver Limited |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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