Correlation Between ARN Media and Step One
Can any of the company-specific risk be diversified away by investing in both ARN Media and Step One 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 Step One 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 Step One Clothing, you can compare the effects of market volatilities on ARN Media and Step One 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 Step One. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARN Media and Step One.
Diversification Opportunities for ARN Media and Step One
Weak diversification
The 3 months correlation between ARN and Step is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding ARN Media Limited and Step One Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Step One Clothing 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 Step One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Step One Clothing has no effect on the direction of ARN Media i.e., ARN Media and Step One go up and down completely randomly.
Pair Corralation between ARN Media and Step One
Assuming the 90 days trading horizon ARN Media Limited is expected to under-perform the Step One. But the stock apears to be less risky and, when comparing its historical volatility, ARN Media Limited is 1.16 times less risky than Step One. The stock trades about -0.15 of its potential returns per unit of risk. The Step One Clothing is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 126.00 in Step One Clothing on October 28, 2024 and sell it today you would earn a total of 1.00 from holding Step One Clothing or generate 0.79% 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. Step One Clothing
Performance |
| Timeline |
| ARN Media Limited |
| Step One Clothing |
ARN Media and Step One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARN Media and Step One
The main advantage of trading using opposite ARN Media and Step One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARN Media position performs unexpectedly, Step One 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 Step One will offset losses from the drop in Step One's long position.| ARN Media vs. Evolution Mining | ARN Media vs. Charter Hall Education | ARN Media vs. Rand Mining | ARN Media vs. Talisman Mining |
| Step One vs. Stelar Metals | Step One vs. Lykos Metals | Step One vs. Champion Iron | Step One vs. Sky Metals |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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