Correlation Between Aruma Resources and ARN Media
Can any of the company-specific risk be diversified away by investing in both Aruma Resources and ARN Media 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 Aruma Resources and ARN Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aruma Resources and ARN Media Limited, you can compare the effects of market volatilities on Aruma Resources and ARN Media 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 Aruma Resources with a short position of ARN Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aruma Resources and ARN Media.
Diversification Opportunities for Aruma Resources and ARN Media
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aruma and ARN is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Aruma Resources and ARN Media Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARN Media Limited and Aruma Resources 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 Aruma Resources are associated (or correlated) with ARN Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARN Media Limited has no effect on the direction of Aruma Resources i.e., Aruma Resources and ARN Media go up and down completely randomly.
Pair Corralation between Aruma Resources and ARN Media
Assuming the 90 days trading horizon Aruma Resources is expected to under-perform the ARN Media. In addition to that, Aruma Resources is 1.96 times more volatile than ARN Media Limited. It trades about -0.12 of its total potential returns per unit of risk. ARN Media Limited is currently generating about 0.14 per unit of volatility. If you would invest 60.00 in ARN Media Limited on September 12, 2024 and sell it today you would earn a total of 15.00 from holding ARN Media Limited or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aruma Resources vs. ARN Media Limited
Performance |
| Timeline |
| Aruma Resources |
| ARN Media Limited |
Aruma Resources and ARN Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aruma Resources and ARN Media
The main advantage of trading using opposite Aruma Resources and ARN Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aruma Resources position performs unexpectedly, ARN Media 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 ARN Media will offset losses from the drop in ARN Media's long position.| Aruma Resources vs. BKI Investment | Aruma Resources vs. Environmental Clean Technologies | Aruma Resources vs. Carnegie Clean Energy | Aruma Resources vs. Hotel Property Investments |
| ARN Media vs. Autosports Group | ARN Media vs. Dexus Convenience Retail | ARN Media vs. Duxton Broadacre Farms | ARN Media vs. Iron Road |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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