Correlation Between Arax Holdings and Innovative Payment
Can any of the company-specific risk be diversified away by investing in both Arax Holdings and Innovative Payment 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 Innovative Payment 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 Innovative Payment Solutions, you can compare the effects of market volatilities on Arax Holdings and Innovative Payment 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 Innovative Payment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arax Holdings and Innovative Payment.
Diversification Opportunities for Arax Holdings and Innovative Payment
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Arax and Innovative is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Arax Holdings Corp and Innovative Payment Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Payment 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 Innovative Payment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Payment has no effect on the direction of Arax Holdings i.e., Arax Holdings and Innovative Payment go up and down completely randomly.
Pair Corralation between Arax Holdings and Innovative Payment
Given the investment horizon of 90 days Arax Holdings Corp is expected to under-perform the Innovative Payment. But the pink sheet apears to be less risky and, when comparing its historical volatility, Arax Holdings Corp is 3.07 times less risky than Innovative Payment. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Innovative Payment Solutions is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 10.00 in Innovative Payment Solutions on August 25, 2024 and sell it today you would lose (0.50) from holding Innovative Payment Solutions or give up 5.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arax Holdings Corp vs. Innovative Payment Solutions
Performance |
| Timeline |
| Arax Holdings Corp |
| Innovative Payment |
Arax Holdings and Innovative Payment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arax Holdings and Innovative Payment
The main advantage of trading using opposite Arax Holdings and Innovative Payment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arax Holdings position performs unexpectedly, Innovative Payment 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 Innovative Payment will offset losses from the drop in Innovative Payment's long position.| Arax Holdings vs. Absolute Health and | Arax Holdings vs. China Health Management | Arax Holdings vs. Embrace Change Acquisition | Arax Holdings vs. TransAKT |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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