Correlation Between ARN Media and Indiana Resources
Can any of the company-specific risk be diversified away by investing in both ARN Media and Indiana Resources 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 Indiana Resources 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 Indiana Resources, you can compare the effects of market volatilities on ARN Media and Indiana Resources 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 Indiana Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARN Media and Indiana Resources.
Diversification Opportunities for ARN Media and Indiana Resources
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ARN and Indiana is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding ARN Media Limited and Indiana Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indiana Resources 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 Indiana Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indiana Resources has no effect on the direction of ARN Media i.e., ARN Media and Indiana Resources go up and down completely randomly.
Pair Corralation between ARN Media and Indiana Resources
Assuming the 90 days trading horizon ARN Media Limited is expected to under-perform the Indiana Resources. In addition to that, ARN Media is 1.55 times more volatile than Indiana Resources. It trades about -0.15 of its total potential returns per unit of risk. Indiana Resources is currently generating about 0.27 per unit of volatility. If you would invest 6.10 in Indiana Resources on October 23, 2024 and sell it today you would earn a total of 0.40 from holding Indiana Resources or generate 6.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
ARN Media Limited vs. Indiana Resources
Performance |
| Timeline |
| ARN Media Limited |
| Indiana Resources |
ARN Media and Indiana Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARN Media and Indiana Resources
The main advantage of trading using opposite ARN Media and Indiana Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARN Media position performs unexpectedly, Indiana Resources 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 Indiana Resources will offset losses from the drop in Indiana Resources' long position.| ARN Media vs. Southern Cross Gold | ARN Media vs. Tlou Energy | ARN Media vs. Minbos Resources | ARN Media vs. Encounter Resources |
| Indiana Resources vs. Playside Studios | Indiana Resources vs. Ramsay Health Care | Indiana Resources vs. Charter Hall Education | Indiana Resources vs. Sports Entertainment 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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