Correlation Between Arax Holdings and Fobi AI
Can any of the company-specific risk be diversified away by investing in both Arax Holdings and Fobi AI 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 Arax Holdings and Fobi AI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arax Holdings Corp and Fobi AI, you can compare the effects of market volatilities on Arax Holdings and Fobi AI 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 Arax Holdings with a short position of Fobi AI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arax Holdings and Fobi AI.
Diversification Opportunities for Arax Holdings and Fobi AI
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arax and Fobi is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Arax Holdings Corp and Fobi AI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fobi AI and Arax Holdings 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 Arax Holdings Corp are associated (or correlated) with Fobi AI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fobi AI has no effect on the direction of Arax Holdings i.e., Arax Holdings and Fobi AI go up and down completely randomly.
Pair Corralation between Arax Holdings and Fobi AI
Given the investment horizon of 90 days Arax Holdings Corp is expected to generate 1.5 times more return on investment than Fobi AI. However, Arax Holdings is 1.5 times more volatile than Fobi AI. It trades about 0.05 of its potential returns per unit of risk. Fobi AI is currently generating about -0.04 per unit of risk. If you would invest 95.00 in Arax Holdings Corp on August 31, 2024 and sell it today you would lose (41.00) from holding Arax Holdings Corp or give up 43.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arax Holdings Corp vs. Fobi AI
Performance |
| Timeline |
| Arax Holdings Corp |
| Fobi AI |
Arax Holdings and Fobi AI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arax Holdings and Fobi AI
The main advantage of trading using opposite Arax Holdings and Fobi AI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arax Holdings position performs unexpectedly, Fobi AI 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 Fobi AI will offset losses from the drop in Fobi AI's long position.| Arax Holdings vs. AppTech Payments Corp | Arax Holdings vs. Arbe Robotics Ltd | Arax Holdings vs. Argentum 47 | Arax Holdings vs. Internet Infinity |
| Fobi AI vs. Zerify Inc | Fobi AI vs. Smartmetric | Fobi AI vs. World Health Energy | Fobi AI vs. Plyzer Technologies |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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