Correlation Between ARN Media and Home Consortium
Can any of the company-specific risk be diversified away by investing in both ARN Media and Home Consortium 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 Home Consortium 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 Home Consortium, you can compare the effects of market volatilities on ARN Media and Home Consortium 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 Home Consortium. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARN Media and Home Consortium.
Diversification Opportunities for ARN Media and Home Consortium
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ARN and Home is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding ARN Media Limited and Home Consortium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Consortium 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 Home Consortium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Consortium has no effect on the direction of ARN Media i.e., ARN Media and Home Consortium go up and down completely randomly.
Pair Corralation between ARN Media and Home Consortium
Assuming the 90 days trading horizon ARN Media Limited is expected to generate 1.3 times more return on investment than Home Consortium. However, ARN Media is 1.3 times more volatile than Home Consortium. It trades about -0.15 of its potential returns per unit of risk. Home Consortium is currently generating about -0.21 per unit of risk. If you would invest 73.00 in ARN Media Limited on October 28, 2024 and sell it today you would lose (5.00) from holding ARN Media Limited or give up 6.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARN Media Limited vs. Home Consortium
Performance |
| Timeline |
| ARN Media Limited |
| Home Consortium |
ARN Media and Home Consortium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARN Media and Home Consortium
The main advantage of trading using opposite ARN Media and Home Consortium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARN Media position performs unexpectedly, Home Consortium 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 Home Consortium will offset losses from the drop in Home Consortium's long position.| ARN Media vs. Evolution Mining | ARN Media vs. Charter Hall Education | ARN Media vs. Rand Mining | ARN Media vs. Talisman Mining |
| Home Consortium vs. Scentre Group | Home Consortium vs. Vicinity Centres Re | Home Consortium vs. Charter Hall Retail | Home Consortium vs. Cromwell Property Group |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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