Correlation Between ARN Media and Regal Investment
Can any of the company-specific risk be diversified away by investing in both ARN Media and Regal 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 Regal 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 Regal Investment, you can compare the effects of market volatilities on ARN Media and Regal 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 Regal Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARN Media and Regal Investment.
Diversification Opportunities for ARN Media and Regal Investment
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ARN and Regal is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding ARN Media Limited and Regal Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regal Investment 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 Regal Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regal Investment has no effect on the direction of ARN Media i.e., ARN Media and Regal Investment go up and down completely randomly.
Pair Corralation between ARN Media and Regal Investment
Assuming the 90 days trading horizon ARN Media Limited is expected to under-perform the Regal Investment. In addition to that, ARN Media is 2.14 times more volatile than Regal Investment. It trades about -0.14 of its total potential returns per unit of risk. Regal Investment is currently generating about 0.02 per unit of volatility. If you would invest 333.00 in Regal Investment on November 27, 2024 and sell it today you would earn a total of 1.00 from holding Regal Investment or generate 0.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARN Media Limited vs. Regal Investment
Performance |
| Timeline |
| ARN Media Limited |
| Regal Investment |
ARN Media and Regal Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARN Media and Regal Investment
The main advantage of trading using opposite ARN Media and Regal Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARN Media position performs unexpectedly, Regal 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 Regal Investment will offset losses from the drop in Regal Investment's long position.| ARN Media vs. Olympio Metals | ARN Media vs. Lykos Metals | ARN Media vs. Bisalloy Steel Group | ARN Media vs. ACDC Metals |
| Regal Investment vs. Step One Clothing | Regal Investment vs. Champion Iron | Regal Investment vs. Aeris Environmental | Regal Investment vs. Cleanspace Holdings |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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