Correlation Between Arco Platform and Cambium Networks
Can any of the company-specific risk be diversified away by investing in both Arco Platform and Cambium Networks 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 Arco Platform and Cambium Networks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arco Platform and Cambium Networks Corp, you can compare the effects of market volatilities on Arco Platform and Cambium Networks 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 Arco Platform with a short position of Cambium Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arco Platform and Cambium Networks.
Diversification Opportunities for Arco Platform and Cambium Networks
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Arco and Cambium is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Arco Platform and Cambium Networks Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambium Networks Corp and Arco Platform 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 Arco Platform are associated (or correlated) with Cambium Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambium Networks Corp has no effect on the direction of Arco Platform i.e., Arco Platform and Cambium Networks go up and down completely randomly.
Pair Corralation between Arco Platform and Cambium Networks
Given the investment horizon of 90 days Arco Platform is expected to generate 0.52 times more return on investment than Cambium Networks. However, Arco Platform is 1.93 times less risky than Cambium Networks. It trades about 0.02 of its potential returns per unit of risk. Cambium Networks Corp is currently generating about -0.11 per unit of risk. If you would invest 1,250 in Arco Platform on August 31, 2024 and sell it today you would earn a total of 37.00 from holding Arco Platform or generate 2.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 28.51% |
| Values | Daily Returns |
Arco Platform vs. Cambium Networks Corp
Performance |
| Timeline |
| Arco Platform |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Cambium Networks Corp |
Arco Platform and Cambium Networks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arco Platform and Cambium Networks
The main advantage of trading using opposite Arco Platform and Cambium Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arco Platform position performs unexpectedly, Cambium Networks 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 Cambium Networks will offset losses from the drop in Cambium Networks' long position.| Arco Platform vs. Adtalem Global Education | Arco Platform vs. American Public Education | Arco Platform vs. Laureate Education | Arco Platform vs. Grand Canyon Education |
| Cambium Networks vs. Aviat Networks | Cambium Networks vs. Rimini Street | Cambium Networks vs. Airgain | Cambium Networks vs. Calix Inc |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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